(Archived Content)
FROM THE OFFICE OF PUBLIC AFFAIRS
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The President’s Economic Growth and Tax Relief Reconciliation Act of 2001 and Jobs & Growth Tax Relief Reconciliation Act of 2003, made a number of changes in the tax laws that affect individual income tax returns filed for 2003.As a result of the 2001 and 2003 tax cuts, millions of Americans will see higher refunds or lower tax bills this year.As the April 15th filing deadline quickly approaches, below is a list of the tax law changes from the 2001 and 2003 tax cuts that affect individual income tax returns filed for 2003:
- Tax rates were reduced from 27%, 30%, 35%, and 38.6% to 25%, 28%, 33%, and 35%, respectively, helping millions of small business owners and entrepreneurs.
- The 10-percent bracket applies to first $7,000 of taxable income for single filers (up from $6,000 in 2002) and $14,000 (up from $12,000 in 2002) for married taxpayers, meaning more of a family’s income is taxed at the much lower 10% rate.
- The 15-percent tax bracket was widened for married taxpayers to twice the width for single taxpayers, making it end at $56,800 of taxable income (up from $46,700 in 2002), reducing the marriage penalty.
- The standard deduction for married taxpayers was increased to twice the amount allowed for single taxpayers, making it $9,500 (up from $7,850 in 2002), providing marriage penalty relief.
- Other tax brackets, standard deduction amounts, and the amount of personal exemptions were indexed for the effects of inflation.
- The child tax credit was increased by $400 to $1,000 per qualifying child (up from $600 in 2002), helping families meet expenses such as clothing, education, and health care.
- Dividends generally were made eligible for a special tax rate of 15% (5% for taxpayers in the 10% or 15% tax brackets), down from 38.6%, greatly reducing the double taxation of dividends, especially for those who depend on dividend income in retirement.
- The tax rate on long term capital gains was reduced to 15% (5% for taxpayers otherwise in the 10% or 15% tax brackets) down from 20%, encouraging investment.
- Alternative minimum tax (AMT) exemptions were increased to $58,000 (up from $49,000 in 2002) for married couples and to $40,250 (up from $35,750 in 2002) for unmarried taxpayers, preserving promised tax relief for taxpayers.
- The maximum amount of expenses eligible for the child and dependent care credit was increased to $3,000 (up from $2,400 in 2002) for one child and to $6,000 (up from $4,800 in 2002) for two or more children.Also, the credit was increased and expanded for lower income taxpayers.
- The maximum amount of the lifetime learning education credit was doubled to $2,000, making it easier for workers to improve their skills.
- The deduction for self-employed health insurance expenditures increased to 100% (up from 70% in 2002), making health insurance more affordable.
- The income limits for IRA deductions were increased helping Americans save for retirement.
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America has a choice: It can continue to grow the economy and create new jobs as the President’s policies are doing; or it can raise taxes on American families and small businesses, hurting economic recovery and future job creation.