2001 Tax Rate Changes Explained

Added July 17, 2001 by WGN-TV Show Notes -- Tuesday, July 17, 2001

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Summary: Two weeks ago, as part of The Economic Growth & Tax Relief Reconciliation Act of 2001, the new tax rates went into effect. With all the hullabaloo about how much money everyone was going to save, the effects on your paycheck won't be as dramatic as all the fireworks that came along with the rhetoric. Take a look at how your paycheck might change:

ANCHOR: If you received your first paycheck of the month this past Friday, you might have noticed that the numbers were a little different.

ANCHOR: Here with more on how the new tax rate is going to affect your paycheck and what to do with your refund is money and real estate expert Ilyce Glink

Good morning

ILYCE: Two weeks ago, as part of The Economic Growth & Tax Relief Reconciliation Act of 2001, the new tax rates went into effect. With all the hullabaloo about how much money everyone was going to save, the effects on your paycheck won't be as dramatic as all the fireworks that came along with the rhetoric. Take a look at how your paycheck might change:

Single, no deductions, semi-monthly check

Taxable wage Old tax rate New tax rate Change $ 20,000 $108.51 $108.51 0% $ 40,000 $294.60 $289.98 - 1.57% $ 60,000 $528.02 $514.98 - 2.48% $100,000 $1,041.93 $1,012.23 - 2.85% Source: Surepayroll, Inc.

ILYCE: Now let's look at how a married couple with two kids will fare:

Married, 2 deductions, semi-monthly check

Taxable wage Old tax rate New tax rate Change $ 20,000 $ 72.26 $ 72.26 0% $ 40,000 $227.03 $224.74 - 1.01% $ 60,000 $460.36 $449.74 - 2.31% $100,000 $967.02 $939.73 - 2.82% SOURCE: Surepayroll, Inc.

ILYCE: Because the changes are so small, tax professionals and accountants say you probably won't have to adjust your withholdings, unless you wrote Uncle Sam an extra big check last April 15th, or received a big refund. Speaking of refunds, as of this Friday, folks will start receiving their tax refund checks of $300 to $600. You're getting it because the lowest tax rate has been adjusted downward from 15 to 10 percent. What should you do with the cash?

What to do with your $300 or $600 tax refund?

Pay off debt Roth IRA 529 Plan

ILYCE: For more information, check out

www.Tax.CCH.com www.IRS.gov

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