Sunday, May 27, 2001

Tax cut at a glance




        A look at some of the highlights of the tax cut of 2001:

Refund checks

        • Treasury Department to mail taxpayers checks beginning this summer: up to $300 for an individual, $500 for a single parent and $600 for a married couple. Actual amounts based on income tax liability and based on people who filed federal income tax returns this year.

Tax rates

        • Rate cuts effective July 1, 2001.

        • New 10 percent tax rate applies to first $6,000 of taxable income for single people, $12,000 for married couples filing jointly.

        • Top 39.6 percent rate drops to 35 percent by 2006. Other rates drop gradually by 2006 from 36 percent to 33 percent; 31 percent to 28 percent; 28 percent to 25 percent. 15 percent remains the same.

        • Personal exemption phase-out repealed gradually beginning in 2006.

Child credit

        • Child credit rises from $500 to $600 effective in 2001, meaning it could be claimed on next year's tax forms. Rises to $700 in 2005, $800 in 2009 and $1,000 in 2010.

        • Taxpayers earning more than $10,000 could claim a credit of 10 percent of earnings, rising to 15 percent over time, above that income level.

Marriage penalty

        • Standard deduction for married couples gradually raised beginning in 2005 so that it is equal to twice that of single taxpayers.

        • 15 percent tax bracket gradually enlarged beginning in 2005 so it applies to more of a married couple's income.

Estate tax

        • Tax repealed in 2010.

        • Top 55 percent rate immediately dropped to 50 percent, eventually to 45 percent.

Retirement

        • Tax-favored contribution limits for individual retirement accounts and Roth IRAs gradually raised from $2,000 to $5,000 by 2008. No change in income limits.

        • Tax-deferred contribution limits for 401(k)-type plans gradually increased from $10,500 to $15,000 in 2006.

Education

        • Maximum $5,000 deduction for higher-education tuition. Lowered to $2,000 for incomes between $130,000 and $160,000. Phases out above that level. Applies from 2002 through 2005.

        • Limitation on deductibility of student loan interest removed.

Sunset

        • Under budget rules, most tax cuts expire Dec. 31, 2010, unless renewed by a future Congress.

Tristaters look forward to tax rebates
Figure your savings
- Tax cut at a glance
Families benefit most
National coverage from Associated Press



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