FROM THE OFFICE OF PUBLIC AFFAIRS

July 1, 2003
JS-524

New Lower Tax Rates In Pay Checks

The Treasury Department announced that by today, employers are expected to have taken steps to begin using the new, lower withholding tables. The Jobs and Growth Tax Relief Reconciliation Act of 2003 reduced tax rates, and the new withholding tables list and describe the guidelines for the new rates.

“Right now all across the country, companies are adjusting withholding tables and as a result hardworking Americans will see more take-home pay,” Secretary Snow said. 

The new lower withholding tables are available on the IRS website at www.irs.gov and in IRS publication 15-T. These withholding tables tell employers and payroll administrators how much less in federal income taxes to withhold from workers’ wages. As a result of these changes workers will begin to see more money in their paychecks.

These withholding changes alone are expected to reduce workers taxes and put $22 billion into the economy this year, and $35 billion next year.  Under the Jobs and Growth Act, a family of four making 40,000 dollars will see their taxes reduced by $1,133 in 2003, a reduction of 96%.

Among other things, the Jobs and Growth Tax Relief and Reconciliation Act immediately in 2003:

• expands the 10-percent bracket from $6,000 to $7,000 for single filers and from $12,000 to $14,000 for married taxpayers filing joint returns, meaning the lowest tax rate will apply to a larger portion of workers' incomes;
• lowers the tax rate from 27% to 15% on taxable incomes between $47,450 and $56,800 for married taxpayers filing jointly;
• lowers the 27% rate to 25% on taxable income up to $68,800 for single taxpayers ($114,650 for married taxpayers filing joint returns);
• lowers the 30% rate to 28% on taxable income up to $143,500 for single taxpayers ($174,700 for married taxpayers filing jointly);
• lowers the 35% rate to 33% on taxable income up to $311,950;
• lowers the 38.6% rate to 35% on taxable income over $311,950;
• reduces the marriage penalty by expanding the standard deduction from $7,950 to $9,500 for married individuals; and
• lowers tax rates for millions of small businesses. Twenty-three million small business owners would benefit from the tax act (including all the provisions in the bill).

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