The Jobs and Growth Tax Relief Reconciliation Act of 2003 passed by Congress and signed into law by Bush includes $320 billion in tax reductions. Just about everyone can expect savings – including investors, businesses, parents and married couples. Even better, many of the provisions of the new law, will go into effect retroactively to January 1 of this year.

Here are some of the highlights:

Reduced Personal Income Tax Rates:

The reductions in income tax rates in excess of 15% scheduled for 2004 and 2006 are accelerated to 2003. The new rates are 25%, 28%, 33% and 35%. The 10% bracket increases from $12,000 of taxable income to $14,000 for married couples (and from $6,000 to $7,000 for single taxpayers) effective for 2003 and 2004.

Reduced Tax Rates on Dividends and Capital Gains:

The maximum tax rate on dividends and capital gains is reduced to 15% in 2003 through 2008. The new rates apply to capital gains realized on or after May 6, 2003, and to dividends received in 2003 and after. Lower rates apply to lower income taxpayers.

Increased Small Business Expensing for New Investment:

The amount of investment that may be immediately deducted by small businesses is increased to $100,000 beginning in 2003. The amount of investment qualifying for this begins to phase out for small businesses with investment in excess of $400,000. Both amounts are now indexed for inflation.

Increased First-Year Bonus Depreciation:

The additional first-year bonus depreciation deduction is increased from 30% to 50% for investments after May 5, 2003 and before January 1, 2005 but taxpayers may elect to continue to use 30% bonus depreciation.

Alternative Minimum Tax Relief:

The Alternative Minimum Tax exemption amount is increased by $9,000 for married taxpayers and by $4,500 for single taxpayers in 2003 and 2004.

Reduced Marriage Penalty:

The standard deduction for married couples filing jointly is increased to double the amount of the standard deduction for single taxpayers in 2003 and 2004. The width of the 15% tax bracket for married couples is increased to twice the width for single taxpayers in 2003 and 2004. These reductions benefit married couples who claim the standard deduction or have taxable income greater than $47,450.

Increased Child Tax Credit:

The amount of the child tax credit is increased to $1,000 in 2003 and 2004. The $400 increase for 2003 will be paid in advance beginning in July 2003.

Reduced Withholding:

Withholding for employees will be reduced for the balance of the year beginning in June 2003.

2003 Corporate Estimated Tax Payments:

25% of the amount of any required installment of corporate estimated tax which is otherwise due on September 15, 2003 will not be due until October 1, 2003.

If you would like more details on how these changes will effect you or your business, please contact Bob Greenberger at (404) 261-7200.