On Wednesday, several key tax provisions were signed into law by President Bush.  According to Shelley M. Buckholtz, a tax attorney with the Mikkelborg firm, highlights of the new legisation include:

• Extended reduced capital gains and dividend rates.  The bill will extend for two years the 15 percent rate on long-term capital gains and dividends.  For low-income taxpayers, that rate will be 0 percent.
• Greater AMT relief.  The tax, originally intended for the wealthy, now threatens to catch tens of millions of middle-class taxpayers unless lawmakers continue to increase the AMT exemption levels, since the original levels were never adjusted for inflation.  The new exemption levels will be $42,500 for single filers, up from $40,450, and $62,550 for joint filers, up from $58,000. 
• Increased ROTH eligibility.  The legislation now allows all taxpayers, not just those with modified adjusted gross income of $100,000 or less, to convert their traditional IRAs to ROTH IRAs starting in 2010.  Taxpayers must pay a tax on the conversion.

No information contained in this update is intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.