JS-1316: April 15th Tax Day Reminder: The 2001 & 2003 Tax Relief Plans Will Impact Income Tax Returns Filed

FROM THE OFFICE OF PUBLIC AFFAIRS

April 9, 2004
JS-1316

April 15th Tax Day Reminder: The 2001 & 2003 Tax Relief Plans Will Impact Income Tax Returns Filed

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.



	FROM THE OFFICE OF PUBLIC AFFAIRS April 9, 2004 JS-1316 April 15th Tax Day Reminder: The 2001 & 2003 Tax Relief Plans Will Impact Income Tax Returns Filed 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. -30- 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.