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EARLY BIRD TAX FILERS WILL NOTICE SOME CHANGES

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When Congress was debating the 1986 Tax Reform Act, the speeches frequently described the law the way many people used to speak of World War I. Just as it was the war to end all wars, the 1986 law was the tax law to end all tax laws.

We've learned differently.Since the 1986 act, we've had the Revenue Act of 1987, the Technical and Miscellaneous Revenue Act of 1988 and the Revenue Reconciliation Act of 1989, plus odd-ball tax changes to employee benefits.

Come January, early bird tax filers will discover a number of changes, such as:

- For the first time since 1986, income tax brackets will be tied to changes in the Consumer Price Index. The brackets will widen to prevent "bracket creep," a phenomenon of the 1970s and 1980s in which wage inflation pushed people into ever-higher brackets. As a result of indexing, for example, the 15 percent bracket for married couples filing jointly will rise to $30,950 in taxable income, from $29,750 in 1988. For singles, the bracket will increase to $18,550 from $17,850 last year, and for heads of household, it will increase to $24,850 from $23,900.

- Also indexed are things like the maximum dollar contribution to a 401(k) plan, which allows you to contribute pretax dollars to a qualified tax-deferred retirement plan. Until 1987, the maximum contribution was $30,000. In 1987, that limit dropped to $7,000 but was indexed to inflation. In 1989, you can contribute $7,627, and in 1990 the ceiling is expected to rise again, to about $7,900. In contrast, for salary deferral 403(b) plans, a similar type of plan popular with schoolteachers and other public employees, the maximum contribution will remain at $9,500.

- The standard deduction, which you use if you don't itemize, will increase $200 to $5,200 for married couples filing jointly in 1988. For singles it will be $3,100, up $100 from 1988, and for heads of household $4,550, up $150.

- The personal exemption increases to $2,000 in 1989, up $50 from 1988. Next year the exemption will be indexed to inflation. Also indexed is the maximum income you can have and still qualify for the earned income credit, a tax benefit given to low- and moderate-income families. In 1989, the maximum credit is up to $910 from $874 in 1988, and the maximum income necessary to qualify is $19,340.

A less noticeable change is for EE U.S. Savings Bonds bought after Jan. 1, 1990, and used to pay for tuition and fees, interest will be tax-free. This is one of the great New Deals for people trying to save money for education - college or otherwise.