Tax Reform Benefits

American tax law is a constantly changing landscape. Changing tax legislation means you must be up-to-date on the most recent laws to fully benefit from all potential areas.

Major tax legislation in the last two decades

The latest major piece of tax legislation is the Economic Growth and Tax Relief Reconciliation Act of 2001, passed by Congress in May and signed into law by President Bush on June 7, 2001. This complex act, which includes 441 changes to the existing tax code, is expected to save taxpayers $1.35 trillion over the next 10 years. Although the 2001 bill provides the largest tax cut in two decades, previous administrations have enacted other major tax packages. In the 1980s, the Reagan Administration passed the Tax Reform Act of 1986. It not only reduced maximum tax rates and the number of marginal tax brackets, but also eliminated many loopholes that existed in the tax code.

The Clinton Administration also passed major tax legislation. The Revenue Reconciliation Act of 1993 eliminated some of the changes in the 1986 tax act and added two new marginal tax brackets to the existing three, with the top rate hitting 39.6%. The Taxpayer Relief Act of 1997 incorporated many reforms, including the reduction of long-term capital gains taxes and creation of the child and education tax credits, the Roth IRA, and the Education IRA, among other provisions.

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Maximize your tax knowledge to reap all benefits

Whenever major changes affect the tax law, there are potential ways that taxpayers can benefit their personal financial situations.