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The Changing Tax Law: Timeline for 2001, 2003, and 2004 Tax Act Provisions |
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The Changing Tax Law: Timeline for 2001, 2003, and 2004 Tax Act Provisions |
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The 2001, 2003, and 2004 Tax Acts 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) | Education | Marriage Penalty |
| Children | Estate Tax | Retirement |
| Dividends | Income Tax Rates |
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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
|
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Adoption
credit
|
$5,000
|
$10,000
|
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
|
Up
to 30%
|
Up
to 35%
|
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Credit
for employer-provided child care facilities
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N/A
|
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
|
15%
|
Ordinary
income rates
|
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| Education | |
|
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
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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
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N/A
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For
state plans only
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For
both state and private plans
|
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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%
|
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 |
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Tax
rates
|
15%
|
||||||||||
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28%
|
27.5%
|
27%
|
25%
|
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31%
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30.5%
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30%
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28%
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36%
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35.5%
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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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| * Amounts indexed annually for inflation |
| Marriage Penalty | |
|
Provision
|
Prior
Law |
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
|
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Increase
standard deduction for married couples to twice the deduction for singles
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167%
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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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167%
|
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
|
$1,000
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401(k)
deferral limit
|
$10,500
|
$11,000
|
$12,000
|
$13,000
|
$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
|
$3,000
|
$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
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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
|
$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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