The Tax Relief and Health Care Act of 2006 extends a wide variety of tax breaks for both individual and business taxpayers. In some cases, the tax incentives have improved. Here’s a quick rundown:
State sales-tax deduction
The new law retroactively extended this deduction — which was created under the American Jobs Creation Act of 2004 and expired at the end of 2005 — through 2007.
Background: You can deduct your state sales tax in lieu of deducting your state and local income taxes. You can either save all your receipts for actual expenses or use the state-by-state tables in IRS Pub. 600.
In addition to the table amount, you may write off the sales tax on certain big-ticket items, such as cars and boats.
Tip:You’re able to alternate year to year, so you might write off the state sales tax in 2006, then switch to a state income-tax deduction for 2007.
The new law revives the above-the-line tuition deduction for tw...(register to read more)