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The Bush Tax Cuts: How did the 2005 tax cuts change the tax code?

The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) extended lower rates on dividend income and capital gains through 2010, raised the higher exemption amount for the alternative minimum tax for one year, and eliminated income restrictions on high-income taxpayers for converting traditional Individual Retirement Accounts (IRAs) to Roth IRAs. The first two provisions extended provisions of earlier tax legislation, whereas the relaxed restriction on IRA conversions was largely a gimmick used to conform the costs of TIPRA to budgetary rules: taxpayers converting traditional to Roth IRAs pay taxes currently that they otherwise would have paid on withdrawals from their IRAs during retirement; thus the provision raised current revenue at the expense of revenue in later years. This change effectively eliminated the income restriction for participation in a Roth IRA.

 
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   Entry 6 of 7