Tax Law Changes : Tax-Year 2006 Businesses

Pick a topic from the list below to learn about the tax changes:

Depreciation and Section 179 Expense

Increased section 179 limits. The maximum section 179 deduction you can elect for property you placed in service in 2006 is increased to $108,000 for qualified section 179 property. This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $430,000.

More information. Publication 946, How to Depreciate Property , has more information on these rules.

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Self-Employment Tax

The self-employment tax rate on net earnings remains the same for 2006. This rate, 15.3%, is a total of 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).

The maximum amount subject to the social security part for tax years beginning in 2006 has increased to $94,200. All net earnings of at least $400 are subject to the Medicare part.

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Social Security and Medicare Taxes

For 2006, the employer and employee will continue to pay:

  1. 6.2% each for social security tax (old-age, survivors, and disability insurance), and
  2. 1.45% each for Medicare tax (hospital insurance).

Wage limits. For social security tax, the maximum amount of 2006 wages subject to the tax has increased to $94,200. For Medicare tax, all covered 2006 wages are subject to the tax. Circular E (Publication 15), Employer's Tax Guide, has more information about these taxes.

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Standard Mileage Rate

For 2006, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for your business is 44.5 cents a mile for all business miles driven.

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Upcoming Tax Dates

December 10 (Employees who work for tips)
If you received $20 or more in tips during November, report them to your employer - Details

December 15 (Corporations)
Deposit the fourth installment of estimated income tax for 2014 - Details

December 25 (Everyone)
Federal Holiday (Christmas Day) - Details

View More Tax Dates