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Contact Information

Leslie Bonacum
847-267-7153
mediahelp@cch.com
Neil Allen
847-267-2179
neil.allen@wolterskluwer.com

PLEASE NOTE: This press release reflects the Department of Labor's corrected CPIU figures and was correct as of September 29, 2000.  In December, 2000, legislation was passed that had the effect of changing the calculations for tax brackets.  Click her to see the correct tax brackets for 2001.  2001 Tax Brackets.

Less To The Irs Next Year: CCH Releases Tax Bracket Changes For 2001

(RIVERWOODS, ILL., September 29, 2000) – Some modest tax relief is in store for 2001, no matter who wins the presidential election, according to CCH INCORPORATED (CCH), which today released estimated income ranges for each 2001 tax bracket. The projections, developed by CCH, a leading provider of tax law information, indicate single and married taxpayers will pay a bit less to the Internal Revenue Service (IRS) to make up for the impact of inflation.

Although inflation has been low, the tax effects of the annual adjustment will be greater for 2001 than they have been for the last two tax years. Many people will end up ahead by the time their 2001 taxes are due, on April 15, 2002. Better still, most people can realize their savings through their withholding and estimated taxes beginning early in 2001.

Based on the projections, some typical examples of the modest decreases for the 2001 tax year include:

    • A married couple filing jointly with total taxable income of $50,000 could pay $176 less in income taxes in 2001.
    • A single filer with taxable income of $50,000 will contribute $104 less in 2001.

These decreases are due to the adjustment of tax brackets. As the upper end of each bracket is raised, more of each individual’s taxable income is taxed at lower rates.

Adjustments Add Up Over Time

According to George Jones, JD, LL.M, senior federal tax analyst for CCH, the size of the "tax cut" generated over the past five years by these inflation-factor increases is substantial.

"In 1996, the 28-percent bracket began at $40,100 for joint filers, while for 2001 it won’t begin until taxable income reaches $45,200. Using recent IRS statistics, this means that about 30 million households will have $5,100 taxed at the 15-percent level (rather than the 28-percent level) in 2001 than in 1996. That’s a $650 ‘tax cut’ per taxpayer, or about $19.5 billion overall. When you add another $12 billion for those in the 28-percent and higher brackets, you get a grand total of approximately a $31.5 billion ‘tax cut’ next year when measured against what the rate brackets were in 1996."

Standard Deduction, Personal Exemption Also Rise

Adjusted for inflation, the standard deduction and personal exemption amounts are projected to increase as well for 2001. These increases can produce lower taxes by lowering the taxpayer’s taxable income.

    • Married couples filing jointly will see a projected $250 increase in their standard deduction, to $ 7,600.
    • Single taxpayers could see a $150 increase over 2000 in their standard deduction, to $4,550.
    • The personal exemption amount will go up in 2001 by $100 to $2,900.

Here, too, the inflation adjustments add up over time. For example, since 1988, the standard deduction for married taxpayers filing joint returns has grown through inflation by more than 50 percent, from $5,000 to the anticipated $7,600 amount for 2001.

For a complete look at how income ranges for each tax bracket are projected to shift next year, see the attached CCH chart.

"Kiddie" Deduction Increases

In general, inflation adjustments are rounded to the next-lower multiple of $50, so if the adjustment produces an increase of less than $50, no increase is made. This was the case last year with the "kiddie" standard deduction used on the returns of children who are claimed as dependents on their parents’ returns. This year, however, the adjustment has finally pushed the amount of the deduction up, from $700 to $750.

There is no change for the gift tax exemption again this year, though, so it stays at $10,000. The Internal Revenue Code only allows the exemption to rise when the inflation adjustment would produce an increase of $1,000 or more.

Inflation Adjustments

For more than a decade, the U.S. tax code has required that federal income tax brackets and certain other figures be adjusted for inflation annually. The adjustment is based on Consumer Price Index figures for September through August immediately prior to the adjusted year. CCH’s projections are based on the relevant inflation data reissued on September 27, 2000 by the U.S. Department of Labor.

Annual inflation adjustments have been inserted into the Internal Revenue Code in recent years with increasing frequency. Aside from the 40 separate computations needed to inflation-adjust the tax bracket tables each year, the Code now requires over 50 other inflation-driven computations to determine deduction, exemption and exclusion amounts.

Some items in the Code are notably not indexed for inflation, Jones noted.

"The amount that can be contributed to an IRA has been fixed at $2,000 since 1982, whereas it would be $3,760 for 2001 if inflation adjustments were to be applied."

The IRS usually releases official numbers in December each year. CCH tax bracket projections are provided for illustrative purposes only, and should not be used for income tax returns or other federal income tax related purposes until confirmed by the IRS later this year.

About CCH INCORPORATED

CCH INCORPORATED, headquartered in Riverwoods, Ill., was founded in 1913 and has served four generations of business professionals and their clients. The company annually produces more than 700 electronic and print products for the tax, legal, securities, human resources, health care and small business markets. CCH is a wholly owned subsidiary of Wolters Kluwer US. The CCH web site can be accessed at www.cch.com. The CCH Federal and State Tax site can be accessed at http://tax.cchgroup.com.

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CCH INCORPORATED’s 2001 TAX PROJECTIONS*

Married Filing Jointly
(& Surviving Spouse)

2001 Taxable Income

Tax Rate

2000 Taxable Income

$0-$45,200

15%

$0-$43,850

$45,200-$109,250

28%

$43,850-$105,950

$109,250-$166,450

31%

$105,950-$161,450

$166,450-$297,300

36%

$161,450-$288,350

$297,300

39.6%

over $288,350


Married Filing Separately

2001 Taxable Income

Tax Rate

2000 Taxable Income

$0-$22,600

15%

$0-$21,925

$22,600-$54,625 28%

$21,925-$52,975

$54,625-$83,225 31%

$52,975-$80,725

$83,225-$148,650 36%

$80,725-$144,175

$148,650 39.6%

over $144,175

Single Filers

2001 Taxable Income

Tax Rate

2000 Taxable Income

$0-$27,050

15%

$0-$26,250

$27,050-$65,550

28%

$26,250-$63,550

$65,550-$136,750

31%

$63,550-$132,600

$136,750-$297,300

36%

$132,600-$288,350

$297,300

39.6%

over $288,350

Head of Household

2001 Taxable Income

Tax Rate

2000 Taxable Income

$0-$36,250

15%

$0-$35,150

$36,250-$93,600

28%

$35,150-$90,800

$93,600-$151,600

31%

$90,800-$147,050

$151,600-$297,300

36%

$147,050-$288,350

$297,300

   39.6%

over $288,350

Standard Deduction Amounts

Filing Status

2001

2000

Increase

Married Filing Jointly
(& Surviving Spouse)

$7,600

$7,350

$250

Married Filing Separately

$3,800

$3,675

$125

Single

$4,550

$4,400

$150

Head of Household

$6,650

$6,450

$200

Standard Deduction for Dependents ("Kiddie" Standard Deduction)

2001

2000

Increase

$750

$700

$50

Income Level At Which Three-Percent Itemized
Deduction Limitation Takes Effect
(Adjusted Gross Income)

Filing Status

2001

2000

Increase

Married Filing Jointly
(& Surviving Spouse)

$132,950

$128,950

$4,000

Married Filing Separately

$ 66,475

$ 64,475

$2,000

Single

$132,950

$128,950

$4,000

Head of Household

$132,950

$128,950

$4,000

Personal Exemption Amounts

2001

2000

Increase

$2,900

$2,800

$100

Threshold for Personal Exemption Phaseout

Filing Status

2001

2000

Increase

Married Filing Jointly
(& Surviving Spouse)

$199,450

$193,400

$6,050

Married Filing Separately

$ 99,725

$ 96,700

$3,025

Single

$132,950

$128,950

$4,000

Head of Household

$166,200

$161,150

$5,050

Gift Tax Exemption

2001

2000

Increase

$10,000

$10,000

$0

(*These numbers are projected for the 2001 tax year and have not been confirmed by the Internal Revenue Service.)

       


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