The Pension Protection Act was signed into law for the purpose of revising tax rules related to pension plans and individual retirement accounts (IRAs).[2]. ne provision of the act allows for charitable contributions from a taxpayers IRA account to be tax free.[3]. This is a new provision in the tax laws, and allows for a maximum, tax free, contribution up to $100,000.[4]. One of the big benefits of this Act is for older generations. Starting on December 31, 2006 taxpayers who are 62 or older are allowed to withdraw money from their pension plans without having to retire.[5] These provisions make-up only two aspects of the Act. However they are two provisions that should benefit taxpayers. Allowing for tax-free contributions to charity will promote charitable contributions and the provision for pension plan withdrawal will allow older workers to use their pension distributions to reduce their workload. For a more detailed analysis of the Pension Protection Act, see Ericka Roberson, Get Receipts for Every Donation: New Tax Laws Require Them, The Journal of the Business Law Society, at http://iblsjournal.typepad.com/illinois_business_law_soc/tax/index.html.

The Energy Tax Incentives Act will also have an impact on taxpayers as they prepare their returns. This particular provision provides incentives through various tax deductions and credits for the efficient use of energy.[6]. Tax credits can be received for residential as well as vehicle credits.[7]. Individuals qualify for small credits for home improvements that make their homes more energy efficient.[8]. For example the use of electric and geothermal heat pumps qualifies a taxpayer for $300 of credits.[9]. For those homeowners who make use of solar panels for some or all of their energy qualify for a 30% of the qualified investment in the panels up to a maximum of $2,000.[10]. Taxpayers can receive additional for credits for driving certain energy efficient vehicles.[11]. For example, a 2005 or 2006 Toyota Prius provides a taxpayer with a $3,150 tax credit.[12]. A Chevy Silverado Hybrid pick-up provides a $650 tax credit.[13]. Providing for tax credits in this area will provide for a better and more efficient use of energy sources.

In addition to the above changes, The Tax Increase Prevention and Reconciliation Act has important implications for taxpayers.[14]. One of the provisions included in this Act is the raising of the kiddie tax age limit from; under 14 to under 18.[15]. The purpose of the kiddie tax is to prevent parents from reducing their tax liability via transfers to their children.[16]. Under the new law, a child under 18 (as opposed to under 14, in the previous tax law) pays taxes at his or her parents highest marginal tax rate for all investment income over $1,700.[17]. This provision of the act will likely lead to higher tax burdens for families whose teenage children have investment income. Previously, the kiddie tax ignored children above 14, children between 15-17 can now be subject to the kiddie tax. Another provision of this Act is to extend investor tax breaks to at least 2010.[18]. This provision works to reduce the tax rate on long-term capital gain.[19]. In addition, it applies the same favorable tax rate to dividends from domestic corporations as it does to long-term capital gain.[20].

III. Conclusion

The tax changes discussed above are merely the tip of iceberg. Congress, as in most years, has enacted numerous changes to tax policy that will effect many individual taxpayers. Some individuals will find that they are paying more in taxes than last year, and others will find that they are able to tax advantage of various deductions and credits to reduce their tax burden. However, in the end, most everyone ends up paying something.