Another Source of Money:
Tax Cuts & Your Rebate

By now, you should have received your tax rebate from the IRS. For most of us, that amounts to $300 per person (or $600 for a married couple that files a joint return).

What's more, tax rates have declined slightly from previous levels. The most significant change is that the first $12,000 of income you earn is now subject to a 10% Federal income tax rate, instead of the previous 15% level. That saves $600 per year on the first $12,000 in income.

Beyond that, the changes are more modest. For instance, a couple earning $85,000 per year will save about $200 in taxes annually thanks to the 28% tax bracket being changed to a 27.5% bracket. Better still, through 2006, these marginal tax rates will continue to decline. This is also true of the higher tax brackets.

These are modest changes in tax rates, and in most cases, they won't provide enough money to make a significant difference in your day-to-day lifestyle.

All the more reason to give your tax savings some real impact. Rather than spend the extra money, why not put it to work in a tax-deferred savings vehicle such as an annuity, an IRA or by making an extra contribution to your workplace retirement plan. By letting your extra savings grow on a tax-deferred basis, you'll add significant value to what has been a modest tax cut. The result is that the 2001 tax rebate and tax cut will become something worth remembering years from today.

Content is for informational purposes only and may not accurately reflect your specific situation. Information is not intended to provide financial, legal, tax, or accounting advice. You should consult a qualified advisor for advice specific to your own circumstances.