(FORTUNE Magazine) – If you're bewildered by the President's $350 billion tax package, you're not alone. What with labyrinthine "sunset provisions," the changes in the double taxation of dividends, and other tax tongue-twisters, even savvy investors can be overwhelmed by what moves to make now. We asked five of the smartest tax experts we know to help us tackle ten tough questions. --Anna Bernasek

So the new package makes stocks more attractive, right?

Absolutely. Both capital gains and dividend taxes have been cut. The most you'll pay on capital gains is 15%, down from 20%. Dividends, which used to be treated as ordinary income and were taxed at up to 38.6%, are now subject to a maximum tax rate of 15%. (In the Bush plan, the top marginal tax rate has also fallen, from 38.6% to 35%). For instance, if you're in the top income-tax bracket, you'll now pay just $15 out of every $100 you earn from stocks, vs. $35 for every $100 you earn from bonds. (Of course, you have to decide for yourself whether now's the time to plunge back into the stock market.)

I'm sick of hearing pundits blather on about the new benefits of dividend-paying stocks, yet I can't help but wonder, Should I gut my growth companies and load up on utilities?

Not necessarily. Turns out that both dividends and capital gains are now taxed at the 15% rate, making them equally attractive from a tax point of view; before the bill passed, the tax system favored capital-gains-paying growth stocks over those that paid dividends. Still, you know the old saying "A bird in the hand is worth two in the bush"? Dividends might be more appealing in this climate, since they provide a more certain return than capital gains.

Makes sense, but when it comes to how this bill affects mutual funds, I'm totally lost.

That depends on the type of mutual fund you own. The more stocks your fund holds, the more tax benefits will flow to you. But don't be fooled by your monthly statement that labels your returns "dividends." These are not the same dividends that stocks pay out and therefore do not qualify for lower tax rates.

Do I even dare ask whether I get a break on foreign stocks that pay dividends?

This sounds like waffling, but on some you will and others you won't. Foreign stocks that trade in the U.S. market in the form of American depositary receipts will benefit from the lower dividend tax rate. Certain other foreign stocks will not; it depends on whether the company you own is based in a country that has a tax treaty with the U.S. If we list the countries, you won't have room to ask more questions, so check with your investment advisor for more information about this.

Tell me how all the changes affect my 401(k).

Here's where you really should think about adjusting your investments. Because stocks are taxed at a lower rate now than they are likely to be when you cash out your retirement fund, there's now a tax disadvantage to holding stocks in a 401(k). Confused? Here's how it works: After you retire to some faraway island, your 401(k) withdrawals will be treated as income and taxed at your marginal rate (right now the maximum rate is 35%). But today you'd have to pay only 15% on dividends and capital gains from stocks. So get moving on this one: Load up on bonds in your 401(k), and keep your stocks in a taxable account.

Be honest: Does anyone really think politicians are going to swoop in and cancel a popular tax cut in a few years? I mean, shouldn't we assume these cuts are permanent?

No one knows for sure, of course, but there's a good chance they won't be reversed when they're due to expire in 2008. Still, if you're planning an investment strategy beyond the next five years, never say never.

I admit it: I'm still a compulsive day trader, straight out of 1999. What do the tax cuts mean for me?

You're out of luck. If you buy and sell stocks within a year, any capital gains will be considered short term (as they are now) and subject to a top marginal rate of 35% rather than the new 15% rate. So you may want to kick the habit.

Real estate is the only place I've made any money lately. Please tell me this bill doesn't make property any less attractive.

Well, yes and no. The changes do make tax deductions for mortgages a bit less attractive. Since marginal income tax rates have been reduced, your mortgage deduction will decline by a proportional amount. For most people, this won't be a dramatic change, but it could add up for folks with extremely large mortgages. Of course, they all have extremely large houses in which to nurse their wounds.

Give it to me straight: Do I need to read the fine print in this bill?

Ahh, the fine print. Yes, you do need to watch out. First, be aware that dividends from REITs do not qualify for the lower tax rates. Second, if you plan to borrow money to buy dividend-paying stocks, think twice. Before the changes, you could make interest deductions against the income earned from the stocks you purchased. Now, if you buy dividend-paying stocks with borrowed money, you can't make those deductions unless you forgo the lower tax rate.

So those are the only catches?

Well, there is one more: What one hand gives, the other takes away. Get ready for higher taxes from your state government.

SOURCES Blanche Lark Christerson and Benjamin Pace, Deutsche Bank; Barbara Raasch, Ernst & Young; Raymond Russolillo, U.S. Trust; Don Weigandt, J.P. Morgan