Tax Cuts in Brief
By: Source: AARP Bulletin Today Date Posted: 2003-07-01 10:31:00-04:00
Rate Reductions
- Expanding the 10% tax bracket to include more income will reduce annual taxes up to $50 for single filers, $100 for marrieds.
- Higher-income people will gain from these reductions in upper brackets: 27% bracket is reduced to 25%; 30% to 28%; 35% to 33%; 38.6% to 35%.
Marriage Penalty Relief
- The standard deduction for marrieds goes from $7,950 to $9,500 (twice the single taxpayer deduction).
- For marrieds only, the 15% tax bracket is expanded to cover more income.
Dividends & Capital Gains
- Qualifying dividends and capital gains will both be taxed at 15%.
- A major exception: People in the 10% and 15% brackets will be taxed at 5%.
- People in the 10% and 15% brackets will pay no tax on capital gains or dividends in 2008.
Bigger Child Credit
- The credit for children under 17 rises from $600 to $1,000 per child.
- The credit is phased out starting at adjusted gross income of $75,000 for singles and $110,000 for marrieds.
- The IRS will mail checks to taxpayers this month and next — $400 for each child claimed in 2002.
A Taxing Schedule
- To keep within budget, Congress attached " sunset " provisions to the tax breaks. All will expire over the next few years unless Congress votes to extend them (as may well happen).
- The chart shows how long each break is scheduled to last. (Example: The expanded 10% bracket will expire at the end of 2004, unless renewed.)
preview