Friday, December 14, 2007

The Savings Game: Change in tax law could benefit many investors

My plans for substantial tax savings next year, including tax-free stock dividends and long-term capital gains, revolve around one figure: $65,100.

While not official yet, $65,100 is projected to be the top of the 15 percent tax bracket for spouses filing joint returns in 2008, based on how brackets are adjusted annually for inflation. For single filers, it would be $32,550. For every extra dollar, Uncle Sam would take a progressively bigger cut (first 25 percent, then 28, 33 and 35 percent).

That's reason enough for my wife, Georgina, and me - and all taxpayers - to try to stay within the 15 percent bracket (by contributing to deductible retirement plans, for example, and claiming legitimate deductions and adjustments to income).

But there is another incentive: From 2008 through 2010, current tax law calls for a ''0 percent'' rate - that's right, nada - on qualifying stock dividends and long-term capital gains on the sale of securities for taxpayers in the two lowest brackets of 10 and 15 percent.

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