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The Changing Tax Law: Timeline for 2001 and 2003 Tax Act |
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The 2001 Tax Act and the 2003 Tax Act contained significant tax law changes that phase in and out over the coming years. All changes end in 2011 and the rules revert to the pre-2001 Tax Act rules, unless Congress again changes the law. To make your tax planning most effective, keep an eye on the calendar to see when various tax breaks begin and end. Use the timeline below to help you keep track of year-by-year changes in the main areas affected by these laws. |
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Capital
Gains (Long-term) |
|
Provision
|
Prior
Law |
2001
|
2002
|
2003
(1/1-5/5) |
2003
( 5/6-12/31) |
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
|
|
Top tax rate
for lower-bracket taxpayers
|
10%
|
5%
|
0%
|
10%
|
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Top tax rate
for all other taxpayers
|
20%
|
15%
|
20%
|
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|
|
| Children | |
|
Provision
|
Prior
Law |
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
|
Child tax
credit
|
$500
|
$600
|
$1,000
|
$700
|
$800
|
$1,000
|
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Adoption
credit
|
$5,000
|
$10,000
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Limit
indexed for inflation
|
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Expenses for
dependent care credit
|
For 1: Up to
$2,400
For 2 or more: Up to $4,800 |
For 1: Up to
$3,000
For 2 or more: Up to $6,000 |
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Dependent
care credit
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Up to 30%
|
Up to 35%
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Credit for
employer-provided child care facilities
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N/A
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25%
up to a maximum $150,000 per year
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|
|
| Dividends | |
|
Provision
|
Prior
Law |
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
|
Top rate for
lower bracket taxpayers
|
Ordinary
income rates
|
5%
|
0%
|
Ordinary
income rates
|
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All other
taxpayers
|
Ordinary
income rates
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15%
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Ordinary
income rates
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| Education | |
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Provision
|
Prior
Law |
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
|
Annual
contribution limit for education savings accounts (Education IRAs)
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$500
|
$2,000
|
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Income
phase-out range for education savings accounts
|
Single:$95,000 - $110,000
Joint: $150,000 - $160,000 |
Single:$95,000 - $110,000
Joint: $190,000 - $220,000 |
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Tax-free
withdrawals for education savings accounts
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For higher
education expenses
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For
elementary, secondary, and higher education expenses
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Above-the-line deduction for higher education expenses (subject to
income limitations)
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N/A
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$3,000
(income limit $65,000 singles, $130,000 joint filers) |
$4,000
(income limit $65,000 singles, $130,000 joint filers) $2,000 (income limit $80,000 singles, $160,000 joint filers) |
N/A
|
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Tax-free
withdrawals from Section 529 plans
|
N/A
|
For state
plans only
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For both
state and private plans
|
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|
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| Estate Tax | |
|
Provision
|
Prior
Law |
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
|
Top rate
|
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|
55%
|
50%
|
49%
|
48%
|
47%
|
46%
|
45%
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Repealed
|
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Exemption
amount
|
$675,000
|
$1 Million
|
$1.5 Million
|
$2 Million
|
$3.5 Million
|
Repealed
|
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|
|
| Income Tax Rates | |
|
Provision
|
Prior
Law |
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
|
10% tax
bracket
|
N/A
|
Singles -
$6,000
Couples - $12,000 Heads of household - $10,000 |
Singles -
$7,000
Couples - $14,000 |
Singles -
$6,000
Couples - $12,000 |
Singles -
$7,000
Couples - $14,000 |
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Tax rates
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15%
|
||||||||||
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28%
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27.5%
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27%
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25%
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31%
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30.5%
|
30%
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28%
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36%
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35.5%
|
35%
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33%
|
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39.6%
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39.1%
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38.6%
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35%
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Limit on
itemized deductions
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Itemized
deductions are limited for higher-income taxpayers
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Limit
reduced by 1/3
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Limit
reduced by 2/3
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Limit
repealed
|
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Personal
exemption phase-out
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Personal
exemptions are phased out for higher-income taxpayers
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Phase-out
reduced by 1/3
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Phase-out
reduced by 2/3
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Phase-out
repealed
|
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AMT
exemption
|
$33,750
Single
$45,000 Joint |
$35,750
Single
$49,000 Married filing jointly |
$40,250 Single $58,000 Married filing jointly |
$33,750
Single
$45,000 Married filing jointly |
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| Marriage Penalty | |
|
Provision
|
Prior
Law |
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
|
|
Increase
standard deduction for married couples to twice the deduction for
singles
|
|
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167%
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200%
|
174%
|
184%
|
187%
|
190%
|
200%
|
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Increase size of 15%
bracket for married
couples to twice the size of the 15% bracket for singles
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|
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167%
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200%
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180%
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187%
|
193%
|
200%
|
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| Retirement | |
|
Provision
|
Prior
Law |
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
|
IRA
contribution limit
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$2,000
|
$3,000
|
$4,000
|
$5,000
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Limit
indexed for inflation
|
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IRA 50 &
older catch-up contribution
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N/A
|
$500
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$1,000
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401(k)
deferral limit
|
$10,500
|
$11,000
|
$12,000
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$13,000
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$14,000
|
$15,000
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Limit
indexed for inflation
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401(k) 50 &
older catch-up deferral
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N/A
|
$1,000
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$2,000
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$3,000
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$4,000
|
$5,000
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Limit
indexed for inflation
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SIMPLE
deferral limit
|
$6,500
|
$7,000
|
$8,000
|
$9,000
|
$10,000
|
Limit
indexed for inflation
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SIMPLE 50 &
older catch-up deferral
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N/A
|
$500
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$1,000
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$1,500
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$2,000
|
$2,500
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Limit
indexed for inflation
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Tax credit
for lower-income contributors to plans
|
N/A
|
From 10% to
50% of the first $2,000 contributed
|
N/A
|
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Roth option
for 401(k) plans
|
N/A
|
Permitted
|
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Employers
may establish "deemed IRAs" within the company's retirement plan
|
N/A
|
Permitted
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