Child Tax Credit |
| New 2003 Law |
2002 Law |
| Credit = $1,000 per qualifying child |
Credit = $600 per qualifying child |
| This will be effective in 2003 and 2004. |
|
| Rebate checks will be sent out for the 2003 credit,
starting in July 2003, based on 2002 tax returns filed in 2003. |
|
| A qualifying child is: · under age 17 · a son, daughter
(or other descendent), step child, or eligible foster child · allowed as a dependent
of the taxpayer · a U.S. citizen or resident |
|
| Result: Lower tax bills and/or rebate checks of up
to $400 per child. The credit begins to phase out for taxpayers with adjusted
gross incomes over: · $110,000 (for married taxpayers filing jointly) · $75,000
(for unmarried individuals), and · $55,000 (for married taxpayers filing separately).
|
|
Marriage Penalty Relief
(for taxpayers claiming the Standard Deduction) |
| New 2003 Law |
2002 Law |
| For taxpayers who are 1) married, 2) filing jointly,
and 3) claiming the standard deduction: · increase the amount of the standard
deduction to $9,500 (exactly twice that of single taxpayers) |
The standard deduction for two single filers ($9,500)
is greater than the standard deduction for a married couple filing a joint return
($7,950). |
| The standard deduction for taxpayers who are married
but file separately is the same as for single filers. |
The standard deduction for taxpayers who are married
filing separately is $3,975. |
| This will be effective in 2003 and 2004. |
|
| Result: Lower tax bills for married couples that
claim the standard deduction (and don’t itemize) because the amount of the standard
deduction is increased. |
|
Marriage Penalty Relief
(for taxpayers in the 15% tax bracket) |
| New 2003 Law |
2002 Law |
| Increase the size of the 15% tax bracket for married
couples filing joint returns to twice that of the 15% bracket for single filers.
|
The 15% bracket for taxpayers who are married and
filing jointly ends at $47,450 (and $23, 725 for those who are married filing
separately). |
| This change will be effective in 2003 and 2004. |
|
| Result: Lower tax bills for married couples because
more income will be taxed at the lower 15% rate. |
|
10% Tax Bracket |
| New 2003 Law |
2002 Law |
| Filing Status |
Bracket Limit |
Filing Status |
Bracket Limit |
| Single |
$7,000 |
Single |
$6,000 |
| Married, Filing Jointly |
$14,000 |
Married, Filing Jointly |
$12,000 |
| This change will be effective in 2003 and 2004. |
|
| The bracket will be adjusted in 2004 for inflation. |
|
| Result: lower tax bills because more income will
be taxed at the lowest rate. |
|
Lower Tax Rates |
| New 2003 Law |
2002 Law |
| Accelerate tax rate reductions that were scheduled for 2004 & 2006.
| |
| Tax Brackets |
Tax Brackets |
| 35% |
38.6% |
| 33% |
35% |
| 28% |
30% |
| 25% |
27% |
| 15% |
15% |
| 10% |
10% |
Result: Lower tax bills for those in the top four
tax brackets because rates have been cut at least two percentage points per bracket.
Those who will benefit in 2003 are taxpayers with incomes over:
- $28,400 (single)
- $56,800 (married filing jointly, and qualifying widow(er)s)
- $38,050 (head of household), and
- $28,400 (married filing separately)
|
|
Alternative Minimum
Tax (AMT) |
| New 2003 Law |
2002 Law |
| Increase the Alternative Minimum Tax (AMT) exemption
amount. |
|
| Filing Status |
Exemption Amount |
Filing Status |
Exemption Amount |
| Unmarried |
$40,250 |
Unmarried |
$35,750 |
| Married, Filing Jointly (& surviving spouses) |
$58,000 |
Married, Filing Jointly (& surviving spouses) |
$49,000 |
| Married, Filing Separately |
| This change will be effective in 2003 and 2004. |
|
| Result: Taxpayers that would be subject to the AMT
as a result of newly lower regular tax rates are given additional protection from
this parallel tax. |
|
Bonus Depreciation |
| New 2003 Law |
2002 Law |
| Additional 1st year (bonus) depreciation = 50%. |
Additional 1st year (bonus) depreciation = 30%. |
| This increase would apply to business property that
is currently eligible for 30% bonus depreciation and is placed in service after
May 5, 2003 and before January 1, 2005. |
|
| This is effective for taxable years ending after
May 5, 2003. |
|
| Result: Lower tax bills for people that purchase
cars and equipment used in business because the cost can more immediately be written
off as an expense. |
|
Section 179 |
| New 2003 Law |
2002 Law |
| The annual Section 179 expense amount = $100,000
(for qualified property placed into service in 2003, 2004, and 2005. |
The annual Section 179 expense amount = $25,000. |
| The amount of eligible property that may be placed
in service before taxpayers start to lose the ability to claim this deduction
= $400,000 per year. |
The amount of eligible property that may be placed
in service before taxpayers start to lose the ability to claim this deduction
= $200,000 per year. |
| The dollar limits will be indexed annually for inflation
after 2003 and before 2006. |
A section 179 deduction can only be claimed on an
originally filed return (not on amended returns). |
| Off-the-shelf computer software placed in service
during 2003 through 2005 will now be eligible for section 179 deduction treatment.
|
|
| This proposal now allows taxpayers to make or revoke
section 179 expensing elections (for taxable years beginning in 2003 through 2005)
on amended returns without the consent of the IRS. This means that a taxpayer
could potentially offset additional income reported on an amended tax return with
a section 179 deduction. |
|
| This change is in effect for tax years beginning
after December 31, 2002. |
|
| Result: Lower tax bills for people that purchase
cars and equipment used in business because the cost can more immediately be written
off as an expense. |
|
Capital Gains |
| New 2003 Law |
2002 Law |
| The maximum tax rates that are levied on adjusted
net capital gains = 5% (for taxpayers in the 10 & 15% brackets; this goes down
to 0% in 2008) and 15%. |
The maximum tax rates that are levied on adjusted
net capital gains = 10% and 20%. |
| This change applies to capital assets that are held
more than one year and sold or exchanged at a gain (including any installment
payments received) on or after May 6, 2003 and before January 1, 2009. |
|
| The lower rates would apply to both regular tax and
the Alternative Minimum Tax. |
|
| Result: Lower tax bills for those who sell property,
stocks, or mutual funds because long term capital gains are taxed at lower rates.
|
|
Dividend Tax |
| New 2003 Law |
2002 Law |
| The amount of tax that is levied on an individual’s
qualifying dividends is 5% (for taxpayers in the 10 & 15% brackets) or 15% (depending
upon income). |
The amount of tax that is levied on an individual’s
qualifying dividends is as high as 38.6% (depending upon income). |
| Dividends received by an individual from domestic
and qualified foreign corporations are eligible for this tax break. |
|
| This applies to regular tax as well as Alternative
Minimum Tax (AMT). |
|
| The proposal is effective from 2003 through 2008. |
|
| Result: Lower tax bills because qualifying dividends
are taxed at lower rates. |
|
Corporate Estimated Tax Due Date
|
| New 2003 Law |
2002 Law |
| 25% of the corporate estimated quarterly tax payments
due on September 15, 2003 don’t have to be paid before October 1, 2003. |
Corporate estimated quarterly tax payments are due
on September 15, 2003. |
| Result: Deferral of a portion of corporate estimated
tax payments. |
|
