New Year, New Tax-Saving Opportunities

But there's more. You can claim a 30% credit for the cost of solar energy systems that you install to heat the air or water in your home. Big note: If you install a heater in your pool or hot tub, that cost doesn't count. (Although feel free to invite me over.) This credit is capped at $2,000 apiece for home furnaces and water heaters, and is available for vacation homes as well.

More Help to Give and Save

If you're still behind the ball with your retirement savings, there's some good news for the over-50 crowd in 2006. Your catch-up contribution increases substantially. In 2005, the 401(k) limits maxed out at $14,000 a year, plus an additional $4,000 catch-up for the folks 50 and over. For 2006, the annual contribution increases to $15,000, with a $5,000 catch-up contribution, says Bob Scharin, editor of Warren, Gorham & Lamont/RIA's Practical Tax Strategies, a monthly journal written for tax professionals. So if you're in the 50+ crowd, you can contribute up to $20,000 to your 401(k) in 2006. That's a huge help, so do it if you can.

The IRA contribution limits stay the same at $4,000, although, again, the catch-up amount increases to $1,000 in 2006 from $500 in 2005.

Estate and gift tax limits will increase in 2006 as well.

In 2005, you could give $11,000 to anyone without incurring gift tax. In 2006, that number jumps to $12,000.

And on the estate tax front, a single person previously could exclude $1.5 million from estate tax. In 2006, $2 million will be estate-tax free. And remember, the estate tax is scheduled to go away in 2010, so if you can time your death, go for it. Better yet, if you can time the death of the person you stand to inherit money from...

Some More Money-Saving Miscellany

Remember, the sales tax deduction is supposed to go away at the end of 2005, but there's talk amongst our tax nerds that the big boys are thinking of extending it. So it wouldn't hurt to save your 2006 receipts just in case, especially if you plan on making a big purchase, such as a car, ring, watch or boat.