Thanks to the Economic Growth and Tax Relief Reconciliation Act of 2001, you can save more of what you earn. Brush up on these tax changes:
Income taxes drop
You can make more money, and pay less in taxes if you're in the top four brackets.
| 2006 |
2007 |
| 25% |
25% |
| 28% |
28% |
| 33% |
33% |
| 35% |
35% |
IRAs
Contribution limits to traditional and Roth IRAs are $4,000 in 2006 and 2007. In addition, if you're 50 or older, you're entitled to a catch-up provision $1,000 in 2006 and 2007, which bumps the contribution limits up to $5,000 in 2006 & 2007.
| Age |
2006 |
2007 |
| Under 50 |
$4,000 |
$4,000 |
| 50 and over |
$5,000 |
$5,000 |
Retirement plans
Elective deferral limits to certain qualified retirement plans (401(k) and 403(b)) are $15,000 in 2006 and $15,500 in 2007. In 2006 and 2007, the catch-up provision is $5,000, bumping the contribution limits up to $20,000 (for 2006) & $20,500 (for 2007). The table below shows the contribution limits for these plans.
| Age |
Contribution Limit for 2006 |
Contribution Limit for 2007 |
| Under 50 |
$15,000 |
$15,500 |
| Over 50 |
$20,000 |
$20,500 |
- Did You Know...?
You can deduct job-searching expenses (such as printing, postage, and air fare) on your 1040, as a miscellaneous deduction, if those expenses exceed 2% of your adjusted gross income and if you're looking for a job in your same field. Other miscellaneous deductions (to help exceed the 2% AGI threshold) include tax preparation fees. See IRS Publication 529 for more at www.irs.gov  .
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