Low inflation drives changes in tax limits.

The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) preset the tax rates for 2003. But the income brackets, as well as many other tax-related limitations, are changing based on what turned out to be a low rate of inflation in a year wrought with corporate and economic turmoil [Rev. Proc. 2002-70].

"Clip-and-Save Tax Facts" on page 4 highlights inflation adjustments for 2003 in the following categories:

* Tax rate schedules

* Standard deductions

* Personal exemptions

* Itemized deductions

Following is an overview of additional adjustments:

* Adoption assistance or credit. Employers may, through a qualified adoption assistance program, reimburse their employees tax-free for expenses incurred in the adoption of a child. The maximum amount in 2003 that an employer can exclude from an employee's income in connection with the employee's adoption of a child is $10,160.

Taxpayers with unreimbursed adoption-related expenses may be eligible for a tax credit. For 2003, the maximum credit allowed is the amount of qualified adoption expenses, up to $10,160.

Both the exclusion for employer assistance and the tax credit will phase out for taxpayers with modified adjusted gross income (AGI) between $152,390 and $192,390.

Note: Effective in 2003, the tax credit, employer assistance exclusion, and income phase-out ranges are the same for all qualifying adoptions, whether or not the child has "special needs."

* Kiddie tax. Certain …