If there is a good thing about our tax system, it is the fact that limits are, in most cases, indexed to reflect inflation. You cannot do much to change these numbers, but at least some knowledge about next year's key tax figures will help you sleep better at night.

On the unfavorable end, the cap on wage base for social security tax will be increased from $90,000 in 2005 to $94,200 in 2006. At the 6.2% rate, this represents $260.40 for the estimated 11.2 million people (myself included) who earn more than this amount.

To me, it is a mixed bag:

On the other (favorable) hand, key numbers in federal tax system are also moving up thanks to inflation adjustments. Here is what is in it for me:

- Personal Exemption will increase from $3,200 in 2005 to $3,300 in 2006. This will save $75 for a family of three at 25% tax bracket.

- Standard Deduction for Married Filing Jointly will increase from $10,000 in 2005 to $10,300 in 2006, delivering another $75 savings.

- Standard Deduction for Dependents will increase from $800 in 2005 to $850 in 2006 -- another $12.50!

- The boundary that defines different tax brackets will also change, and it should mean about $200 savings for my family (filing jointly at 25% tax bracket). Below is the estimate for Married Filing Jointly:

Unfortunately, one key figure that is most relevant to me, the foreign tax exclusion amount, is set in stone at $80,000/person/year for many years. Shouldn't we adjust it annually for inflation in the spirit of law?