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When:
January 01, 2002

Who it Affects:
All tax payers
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2002 Tax Law Changes
New rates for everyone

In 2001, taxpayers saw rates drop a half percentage point and got a nice break when the 10% rate kicked in. For 2002, rates drop another half percentage point with two exceptions. The 10% and 15% rates remain unchanged. Thus, if you were in the 27.5% bracket in 2001, youre in the 27% bracket in 2002 and in 2003.

The 10% bracket affects the first $6,000 in income for singles, $10,000 in taxable income for heads of households and $12,000 for married couples. The 15% bracket takes hold once those levels are reached.

Under the 2001 tax law, rates gradually fall until 2006. At that time, the rate that applies to most taxpayers the 27% rate in 2002 will have dropped to 25%; the 30% rate in 2002-2003 falls to 28%; the 35% rate falls to 33%; and the top rate will drop from 38.6% to 35%.

Heres how the rates work in 2002 and beyond.

 2002 tax rates and beyond move down from 2001
Calendar Year15% rate reduced to27.5% rate reduced to30.5% rate reduced to35.5% rate reduced to39.1% rate reduced to
2002-200310%*27%30%35%38.6%
2004-200410%*26%29%34%37.6%
2006 and after10%*25%28%33%35%


* For the first $6,000 of income for single filers, $10,000 for heads of households and $12,000 for married couples filing jointly. 15% bracket applies above those amounts. (In 2008, these income levels rise to $7,000 or singles and $14,000 for married couples. Heads of households will see no change).
Related Tax Article(s): The tax cut is here, but the savings are years away