For more details on retirement-related changes for tax year 2000, you may also want to refer back to What's New in Retirement Taxes. A bit of the material below reiterates that article, but is important to know.
Retirement Savings Changes
. Yes, most employees can put up to $10,500 annually in their 401(k)s in 2000 - seems like we've been waiting forever for that threshold to increase from $10,000.
. Participate in a 401(k) or similar employer-provided retirement savings plan, and you cannot deduct your contribution to a traditional individual retirement account if you earn more than $62,000 in 2000 (married filing jointly), or $42,000 (filing single).
. Concerned about estate taxes? The exemption from these taxes has gone from $650,000 to $675,000. Though it is slated to gradually reach $1 million in 2006, this limit could become a moot point if many members of Congress continue their ongoing battle against the tax. You may also want to visit the Estate Planning topic area, run extremely competently by Susan M. Weschler.
Income Tax Changes
Take heart - most changes will impact mainly higher-income earners.
. The tax-bracket limits for 2001 will rise, thanks to inflation adjustments. According to The Wall Street Journal's preliminary estimates, the 39.6% bracket will begin for many at $297,301. In further Journal analysis, for those married filing jointly, the 28% bracket will start at $45,201, the 31% bracket at $109,251, and the 36% bracket at $166,451. Filing single and the 31% bracket will begin at $65,551 and the 36% bracket at $136,751.
. The standard deduction in 2001 for married couples filing jointly will be $7,600, and $4,550 for most singles. The personal exemption will begin to phase out at $199,451 for married couples filing jointly.
. Itemized deductions in 2001 will be limited for most taxpayers earning more than $132,950 in 2001.
Go To Page: 1 2
