This is one of the immediate changes in the new tax law, and the one that will affect the most people. Actually, everyone. The 15% bracket was split off to create a new 10% bracket, effective from January 1, 2001. And this has created all the fuss about the advance refund checks.
The top four brackets (39.6% - 36% - 31% - 28%) decreased by one percent, but because it was effective July 1, 2001, the net effect will be a 1/2% decrease in tax liability on those taxable income brackets for 2001 tax year (ie, 39.1% - 35.5% - 30.5% -27.5%).
| Year | Tax Bracket Percentages |
| Mid/2001-2003: | 38.6 - 35 - 30 - 27 - 15 - 10 |
| 2004-2005: | 37.6 - 34 - 29 - 26 - 15 - 10 |
| 2006: | 35 - 33 - 28 - 25 - 15 - 10 |
These tax percentages are applied on taxable income; that is, your income after adjustments, deductions, and exemptions. The specific range of taxable income that falls within each bracket will be adjusted for inflation, same as happens each year.
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