Increased Gifting Limits, More Updates For 2006

The IRS released further updates for 2006 today, updating various amounts that are supposed to increase each year based on inflation. One key change was an increase in the gift exclusion from $11,000 to $12,000.

The gift exclusion is the amount of money you can give to another person without affecting the amount you can leave tax free at your death. If you and your spouse both choose to each give the maximum of $12,000 to one of your children and their spouse, you can basically give $48,000 to a married child next year.

Other regular annual changes include increasing the standard deductions and widening each of the tax brackets, so that you can enjoy a little more income at each of the lower brackets.