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| The Basics | Calculate your tax-cut savings
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The new law cuts rates, gives taxpayers a break on dividends and capital gains and generates new savings for families. Our estimator will tell you how much you may save.
By MSN Money staff
Now that the $350 billion tax package of 2003 is law, how much will you save?
MSN Money can show you. Weve built a calculator to help you estimate your savings under the law signed by President Bush on May 28. Our estimator takes the key components of your income and deductions and calculates how your tax bill might turn out.
You can find the estimator here. It's free and easy to use.
To use the estimator properly, simply enter:
- Your gross or pretax income
- Your filing status
- Your deductions or standard deduction
- Your exemptions
- Expected dividend and long-term capital gains
- Number of children under 17 living at home
Well show you your savings using:
Bigger income brackets and deductions, lower top marginal rates. Rates for higher-end taxpayers are reduced. Taxpayers who were in the 27% bracket in 2002 will now be in the 25% bracket. Taxpayers in the 30% bracket now will be in the 28%. The 35% bracket drops to 33%, and the top rate will drop from 38.6% to 35%.
Marriage penalty relief. The standard deduction for married couples rises from $7,950 to $9,500. The new law expands the 15% bracket from its former limit of $47,450 in taxable income to a new top of $56,800, making it now twice the limit for singles. The savings, compared with last year, would be $1,122 for couples with incomes over the new limit.
Lower rates on dividends and capital gains. Rates on dividends and long-term capital gains will be 5% for taxpayers in the 5% or 15% brackets and 15% in the higher brackets.
A higher child tax credit for children under 17 living at home. It will be $1,000 for 2003 instead of $600. The credit wasnt scheduled to hit $1,000 until 2010.
One important note: Our estimator is just that. It wont give you a perfect answer for two reasons:
- When you reach the higher tax brackets, some of your deductions and exemptions are reduced or phased out.
- It does not take into account whether you have to recalculate your return using the alternative minimum tax.
So, have fun with the estimator. And, if you're still working on this years tax return (and we hope you filed for an extension), visit our comprehensive tax estimator for a look at your entire 2002 tax picture and H&R Block for an easy way to file online.
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MSN Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.
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