Despite the fact that 2006’s tax rates remain unchanged from 2005’s rates, it appears that you may be in line for a slight reduction in your overall tax bill.Â Who knew the Federal Government could be so generous?!?
Essentially what is happening is the tax rates are not being adjusted, however the tax brackets are being adjusted for inflation.Â This means that a little bit of your income will get hit at a lower tax rate.Â
Additionally, standard deductions and some credit and exemptions will have a slightly higher dollar amount associated with them this year – again, thanks to an adjustment for inflation.
Despite theÂ small savings you mayÂ see,Â you certainly shouldn’t expect to save a bunch of money on your Federal tax bill this year – if you save anything at all.Â Considering you probably got a raise at some point this year, hopefully you’ll have more taxable income than you did last year.
But, if you do end up saving a couple of bucks, good for you.Â Every little bit counts!
To see this year’s and next year’s tax brackets, please click here.