We were looking at Jeff Schnepper's tips for cutting your 2006 taxes (standard-but-good advice on increasing your tax-exempt expenses this month), when we came upon this nugget about the new tax code for next year: The sale of music you wrote or the copyright to that music will be treated as the sale of a capital asset, subject to the maximum 15% bracket. That's a substantial savings for those who would have had to pay the tax on ordinary income at rates as high as 35%. This provision is effective as of Jan. 1, 2007, through Dec. 31, 2010. Thanks to the lobbying efforts of the Nashville Songwriters Association International, songwriters will have the same tax advantage that music publishers do. (Publishers have always been able to claim revenues from songs as sales of capital assets.) The Entertainment Law Reporter covered this in more detail when the bill passed last June, and notes, "What still isn’t fair, though, is that book authors and visual artists – who also created copyrighted works – still must pay federal tax at ordinary income rates, when they sell the copyrights to their works." Addendum, 12/18/06: This last quotation from the Entertainment Law Reporter may be misleading to writers. While it is possible to sell a copyrighted written work as an asset, in nearly all cases authors retain the copyrights to their works and receive payment in the form of royalties, which are reported on Schedule E.