Rangers' mercurial captain won a first-half penalty with a superb piece of skill and then nonchalantly dinked the spot-kick past Royals keeper Adam Federici and into the net.
The West Londoners were reduced to 10 when Bradley Orr saw red on the stroke of half-time.
But Taarabt's vision helped set up a second for Alejandro Faurlin and, after Shane Long had pulled one back, the Moroccan's free-kick was turned in by Tommy Smith as Rangers ended a run of four successive draws.
With Cardiff not in action until tomorrow against Swansea, Neil Warnock's side lifted themselves back to the summit after extending their club-record unbeaten start to 15 games.
They should have gone ahead in the sixth minute but Rob Hulse, looking for his first goal since joining from Derby in August, came up with a horror miss.
Faurlin's drive from the edge of the area crashed against the underside of the crossbar and fell to Hulse, but - faced with an open goal six yards out - the striker side-footed the ball wide.
Scotland international Jamie Mackie fired over and Hulse saw a header saved by Federici before the hosts made the breakthrough after 27 minutes courtesy of Taarabt.
The former Tottenham midfielder had already danced past two defenders in the area and was about to pull the trigger when Matt Mills brought him down.
Taarabt picked himself up to dispatch the penalty in the coolest manner, chipping the ball over the diving Federici for his sixth goal of the season.
Rangers were dealt a major blow moments before half-time when Orr was shown a straight red card for a reckless lunge on Hal Robson-Kanu.
But it was the hosts who grabbed the second goal of the game with that man Taarabt at the heart of the move.
His superb through-ball sent Mackie scampering down the right and, when the cross was only half-cleared, Faurlin was on hand to thump the loose ball home.
Long halved the deficit in style with a 25-yard drive in the 68th minute, but Reading's hopes of a comeback were dashed just three minutes later when Taarabt's free-kick was saved by Federici and Smith was on hand to cap his full debut with his first Rangers goal.
Simon Church should have set up a nervy finish when he was teed up by Long but he ballooned his shot over the top to ensure Rangers reclaimed top spot.