Year

Upper individual tax brackets

Children

(tax credits)

Education: tuition plans

Retirement  plans

Estate tax

Other

2001

Decreased to 27.5%, 30.5%, 35.5%, and 39.1%

Child tax credit increased to $600.

Gift tax & estate tax exemption increased to $675,000.

2002

Decrease to 27%, 30%, 35%, and 39%

Adoption credit increases to $10,000, phase-out limit increases to $150,000.

New tax credit available for employers providing qualified child care.

Education IRA limit increases to $2,000, phase-out limit increases to $190,000.¹

Qualified distributions from tuition programs become tax-free.

The income phase-out range for deductions of student loan interest increase, and the 60-month limit is repealed.

401(k) Elective Deferral limit and salary reduction SEP deferral limit increase to $11,000. SIMPLE plan elective deferral limit increases to $7,000.²

Contribution limits to traditional & Roth IRAs increase to $3,000.³

Certain low-income taxpayers are entitled to credit for contributions to 401(k), SIMPLE, SEP, or IRA plans.

Gift tax & estate tax exemption increases to $1 million.

Highest gift & estate tax rate reduced to 50%

Annual contribution limit for defined contribution plans increases to $40,000; and compensation limit that a plan may take into account increases to $200,000. The amount of deductible contributions to a profit-sharing plan increases from 15% to 25% of total covered compensation.

2003

The maximum amount available for the dependent care credit increases to $3,000 for one child and $6,000 for two or more children.

401(k) Elective Deferral limit & salary reduction SEP deferral limit both increase to $12,000.

SIMPLE plan elective deferral limit increases to $8,000⁴

Highest gift & estate tax rate reduced to 49%

2004

Decrease to 26%, 29%, 34%, and 38%

Qualified tuition deduction increases to $4,000

401(k) Elective Deferral limit & salary reduction SEP deferral limit both increase to $13,000. SIMPLE plan elective deferral limit increases to $9,000.⁵

Estate tax exemption increases to $1.5 million.

Highest gift & estate tax rate reduced to 48%

2005

The size of the 15% tax bracket for married people begins to expand each year, until it is twice the size of the 15% bracket for single people.

Child tax credit increases to $700

Contribution limits to traditional & Roth IRAs increase to $4,000. Taxpayers over age 50 can contribute additional $500. 401(k) Elective Deferral limit & salary reduction SEP deferral limit both increase to $14,000.

SIMPLE plan elective deferral limit increases to $10,000.⁶

Highest gift & estate tax rate reduced to 47%

The basic standard deduction for a married couple filing a joint return begins to increase each year through 2009, until it is twice that of a single individual.

2006

Decrease to 25%, 28%, 33%, and 35%

Qualified tuition deductions are repealed.

Taxpayers over 50 can contribute an additional $1,000 to IRAs.

401(k) Elective Deferral limit & salary reduction SEP deferral limit both increase to $15,000.

Participants in 401(k) may elect to have all or a portion of their elective deferrals treated as Roth contributions.⁷

Estate tax exemption increases to $2 million. Highest gift & estate tax rate reduced to 46%

Itemized deduction phase-outs & personal exemption phase-outs begin to be slowly repealed over a number of years (i.e., the phase-outs are being phased-out).

2007

Highest gift & estate tax rate reduced to 45%

2008

Contribution limits to traditional & Roth IRAs increase to $5,000. Taxpayers over 50 can contribute an additional $1,000.

2009

Child tax credit increases to $800

Estate tax exemption increases to $3.5 million.

2010

Child tax credit increases to $1,000

Estate tax repealed. Gift tax rate reduced to 35%

2011

All of the provisions of the 2001 Tax Act are repealed, unless Congress renews them.

Highest gift/estate tax rate returns to 55%. Exemptions return to $1 mil.

Year

Upper individual tax brackets

Children

(tax credits)

Education: tuition savings plans

Pension plans

Estate tax

Other