| 2006 and beyond, click here for: Important Changes Important tax law changes that take effect for the current year and for later years. What was New in 2002 |
| Here's a
quick review of some of the tax changes you'll see from
2001 to 2002 as a result of inflation adjustments and
last year's tax law. For details or a discussion of these
and other changes that could affect your situation, give
us a call. |
| Provision | 2002 | 2001 | |
| Business equipment expensing deduction | $24,000 | $24,000 | |
| Percent of health insurance deductible by self-employed individuals | 70% | 60% | |
| Standard mileage rate for business driving | 36.5� per mile | 34.5� per mile | |
| Mileage rate for medical and moving expense deductions | 13� per mile | 12� per mile | |
| Luxury excise tax on new cars / Excess to which tax applies | 3% / $40,000 | 4% / $38,000 | |
| Prior-year
safe harbor for estimated taxes of higher-income individuals |
112% of prior year's tax liability | 110% of prior year's tax liability | |
| Adoption Credit | $10,000 | $5,000 | |
| Maximum wages subject to social security tax | $84,900 | $80,400 | |
| Social security earnings limit | |||
| - | Under age 65 | $11,280 | $10,680 |
| - | 65 and over | No limit | No limit |
| Estate tax exemption | $1,000,000 | $675,000 | |
| Top estate tax rate | 50% | 55% | |
| Annual gift nontaxable limit | $11,000 per donee | $10,000 per donee | |
| Maximum retirement plan contributions | |||
| - | IRA for those under age 50 | $3,000 | $2,000 |
| - | IRA for those 50 and over | $3,500 | $2,000 |
| - | SIMPLE plan for those under age 50 | $7,000 | $6,500 |
| - | SIMPLE plan for those 50 and over | $7,500 | $6,500 |
| - | 401(k) plan for those under age 50 | $11,000 | $10,500 |
| - | 401(k) plan for those 50 and over | $12,000 | $10,500 |
| Tax credit for retirement plan contributions made by lower-income taxpayers | From 10% to 50% of the first $2,000 contributed | None | |
| Contribution limit for education savings accounts (formerly called "education IRAs") | $2,000 | $500 | |
| Income phase-out range for education savings accounts | |||
| - | Singles | $95,000 to $110,000 | $95,000 to $110,000 |
| - | Couples | $190,000 to $220,000 | $150,000 to $160,000 |
| Tax on qualifying distributions from state 529 college plans | Tax-free | Taxed at student's rate | |
| Deduction for college expenses | Up to $3,000 deduction depending on income level | None | |
| Income phase-out range for interest deduction on student loans | |||
| - | Singles | $50,000 to
$65,000 |
$40,000 to $55,000 |
| - | Couples | $100,000 to $130,000 | $60,000 to $75,000 |
| Time limit for loan repayment for interest deduction on student loans | No limit | 60 months | |