New itemized deduction for state and local general sales taxes
Individuals who itemize will be able to deduct either state and local income taxes or state sales taxes on their 2004 and 2005 federal tax returns. Previously, only state and local income taxes were deductible. Individuals who take the sales tax option may deduct their actual sales taxes or use IRS-published tables.

Tougher rules for charitable donations of autos
Tougher rules will apply to the charitable deduction for autos (as well as boats and planes) donated to charity after 2004, if the vehicle has a claimed value of more than $500. If the charitable organization immediately sells the auto (for example, to a wholesaler) without making material improvements to it, your charitable deduction generally can't exceed the charity's gross proceeds from the sale. By contrast, under the pre-2005 rules, the charitable contribution deduction for a noncash contribution (including an auto) generally equals the fair market value of the contributed property.

Beginning in 2005, tougher substantiation rules also will apply to donated vehicles that have claimed value of more than $500 (e.g., the charity must provide a contemporaneous written acknowledgment of the gift bearing a number of specific facts, such as the sales price, if it immediately sells the vehicle). .

Limited expensing writeoff for heavy SUVs
Heavy SUVs – those with a gross vehicle weight rating (GVWR) of more than 6,000 pounds – are not subject to the "luxury auto" depreciation dollar caps. Under the rules that applied before the 2004 Jobs Act, this meant that the entire cost of a heavy SUV used 100% for business could be written off under the expensing rules. Effective for vehicles placed in service after Oct. 22, 2004, only $25,000 of the cost of a heavy SUV may be expensed.

IRA Contribution Limits

Tax Year	Under Age 50	Age 50 and Over
2004	$3,000	$3,500
2005	$4,000	$4,500
2006	$4,000	$5,000
2007	$4,000	$5,000
2008	$5,000	$6,000

Minimum Distribution Rules for Retirement Plan Assets
The minimum distribution rules force individuals to begin taking distributions from tax-favored retirement plans (including traditional IRAs) by a specified time to prevent indefinite tax deferral. Taxpayers who do not comply with the minimum distribution rules are subject to a 50% penalty.

Required Beginning Date

Under the minimum distribution rules, benefits must be distributed or commence being distributed by the required beginning date (RBD). An employee’s RBD for receiving distributions from a qualified plan is normally April 1 of the year following the later of the calendar year the employee (1) reaches age 70-1/2, or (2) retires [from the employer sponsoring the plan].

However, distributions from IRAs must begin no later than April 1 of the year following the calendar year such individual turns age 70-1/2. Once begun, minimum distributions must generally continue each year.

The minimum required distribution (MRD) for later years must be made by December 31 of each year. Thus, the first and second required distributions could occur in the same year. For example, a taxpayer who turns age 70-1/2 in 2003 must take his first IRA distribution no later than April 1, 2004 (for 2003), and his second distribution by December 31, 2004 (for 2004).

Calculating the Minimum Required Distribution

The MRD is calculated by dividing the account balance as of the preceding December 31 by the applicable life expectancy. The MRD must be calculated separately for each IRA. For IRAs, the required distribution for each IRA may be totaled, and the total may be distributed from any one or more IRA’s MRDs during the Owner’s Life

Distributions during the owner’s life must begin no later than the owner’s required beginning date (RBD) and be distributed over a period no longer than:

1. the owner’s life expectancy;
2. the owner’s and a designated beneficiary’s life expectancies; or
3. a fixed period that does not extend beyond such life expectancy(ies).

These rules are met by calculating each year’s MRD using the factor found in the Uniform Lifetime Table (see Table Below) based on the owner’s age at the end of the applicable distribution calendar year. This is true regardless of the designated beneficiary’s actual age, as well as when there is no designated beneficiary.

Age	Applicable divisor	Age	Applicable divisor
70	27.4	93	9.6
71	26.5	94	9.1
72	25.6	95	8.6
73	24.7	96	8.1
74	23.8	97	7.6
75	22.9	98	7.1
76	22.0	99	6.7
77	21.2	100	6.3
78	20.3	101	5.9
79	19.5	102	5.5
80	18.7	103	5.2
81	17.9	104	4.9
82	17.1	105	4.5
83	16.3	106	4.2
84	15.5	107	3.9
85	14.8	108	3.4
86	14.1	109	3.4
87	13.4	110	3.1
88	12.7	111	2.9
89	12.0	112	2.6
90	11.4	113	2.4
91	10.8	114	2.1
92	10.2	115	1.9