Tax Relief in 2003 Under the Jobs and Growth Tax Relief Reconciliation Act of 2003

Example 1: Married Couple with One Child and Income of $40,000 Current Law Total Income (= AGI) Less: Deductions (Larger of Standard or Itemized1) Less: Personal Exemptions (3 @ $3,050) Taxable Income Federal Income Tax Before Credits Less: Child Tax Credit Federal Income Tax After Credits Tax Change: Amount Percent Department of the Treasury Office of Tax Analysis
1

Growth Package 40,000 9,500 9,150
__________

40,000 7,950 9,150
__________

22,900 2,835 600
__________

21,350 2,503 1,000
__________

2,235

1,503 -733 -33% May 22, 2003

Itemized deductions are assumed to be 18 percent of AGI under current law.

Composition of Tax Reduction 2 : Acceleration of 10-Percent Rate Bracket Expansion Accleration of Increase in Child Tax Credit Acceleration of Reduction in Marriage Penalty
(larger standard deduction for joint filers)

100 400 233
__________

Total ……………………………………………...………………………….733
2

Due to possible interactions among items in the Jobs and Growth Tax Relief Reconciliation Act of 2003, the tax reduction attributable to each provision may depend on the order in which the tax reductions are calculated. The composition of the tax reductions in this example is based on the order of the provisions as shown.

Tax Relief in 2003 Under the Jobs and Growth Tax Relief Reconciliation Act of 2003
Example 2: Married Couple with Two Children and Income of $40,000 Current Law Total Income (= AGI) Less: Deductions (Larger of Standard or Itemized1) Less: Personal Exemptions (4 @ $3,050) Taxable Income Federal Income Tax Before Credits Less: Child Tax Credit Federal Income Tax After Credits Tax Change: Amount Percent Department of the Treasury Office of Tax Analysis
1

Growth Package 40,000 9,500 12,200
__________

40,000 7,950 12,200
__________

19,850 2,378 1,200
__________

18,300 2,045 2,000
__________

1,178

45 -1,133 -96% May 22, 2003

Itemized deductions are assumed to be 18 percent of AGI under current law.

Composition of Tax Reduction 2 : Acceleration of 10-Percent Rate Bracket Expansion Accleration of Increase in Child Tax Credit Acceleration of Reduction in Marriage Penalty
(larger standard deduction for joint filers)

100 800 233
__________

Total ……………………………………………...…………………………. 1,133
2

Due to possible interactions among items in the Jobs and Growth Tax Relief Reconciliation Act of 2003, the tax reduction attributable to each provision may depend on the order in which the tax reductions are calculated. The composition of the tax reductions in this example is based on the order of the provisions as shown.

Tax Relief in 2003 Under the Jobs and Growth Tax Relief Reconciliation Act of 2003
Example 3: Married Couple with Two Children and Income of $60,000 Current Law Total Income (= AGI) Less: Deductions (Larger of Standard or Itemized1) Less: Personal Exemptions (4 @ $3,050) Taxable Income Federal Income Tax Before Credits Less: Child Tax Credit Federal Income Tax After Credits Tax Change: Amount Percent Department of the Treasury Office of Tax Analysis
1

Growth Package 60,000 10,800 12,200
__________

60,000 10,800 12,200
__________

37,000 4,950 1,200
__________

37,000 4,850 2,000
__________

3,750

2,850 -900 -24% May 22, 2003

Itemized deductions are assumed to be 18 percent of AGI under current law.

Composition of Tax Reduction 2: Acceleration of 10-Percent Rate Bracket Expansion Accleration of Increase in Child Tax Credit

100 800
__________

Total ……………………………………………...………………………….900
2

Due to possible interactions among items in the Jobs and Growth Tax Relief Reconciliation Act of 2003, the tax reduction attributable to each provision may depend on the order in which the tax reductions are calculated. The composition of the tax reductions in this example is based on the order of the provisions as shown.

Tax Relief in 2003 Under the Jobs and Growth Tax Relief Reconciliation Act of 2003
Example 4: Married Couple with Two Children and Income of $75,000 Current Law Total Income (= AGI) Less: Deductions (Larger of Standard or Itemized 1) Less: Personal Exemptions (4 @ $3,050) Taxable Income Federal Income Tax Before Credits Less: Child Tax Credit Federal Income Tax After Credits Tax Change: Amount Percent Department of the Treasury Office of Tax Analysis
1

Growth Package 75,000 13,500 12,200
__________

75,000 13,500 12,200
__________

49,300 7,017 1,200
__________

49,300 6,695 2,000
__________

5,817

4,695 -1,122 -19% May 22, 2003

Itemized deductions are assumed to be 18 percent of AGI under current law.

Composition of Tax Reduction 2: Acceleration of 10-Percent Rate Bracket Expansion Accleration of Increase in Child Tax Credit Acceleration of Tax Rate Reductions (rates above 15 percent) Acceleration of Reduction in Marriage Penalty
(larger 15-percent tax bracket for joint filers)

100 800 37 185
__________

Total ……………………………………………...…………………………. 1,122
2

Due to possible interactions among items in the Jobs and Growth Tax Relief Reconciliation Act of 2003, the tax reduction attributable to each provision may depend on the order in which the tax reductions are calculated. The composition of the tax reductions in this example is based on the order of the provisions as shown.

Tax Relief in 2003 Under the Jobs and Growth Tax Relief Reconciliation Act of 2003
Example 5: Married Couple, Both Aged 65, with Income of $40,000 Current Law Taxable Pensions and Interest Dividends Social Security Benefits Total Income Less: Nontaxable Social Security benefits AGI Less: Deductions (Larger of Standard or Itemized1) Less: Personal Exemptions (2 @ $3,050) Taxable Income Federal Income Tax Tax Change: Amount Percent Department of the Treasury Office of Tax Analysis
1

Growth Package 23,000 2,000 15,000
__________

23,000 2,000 15,000
__________

40,000 14,750
__________

40,000 14,750
__________

25,250 9,850 6,100
__________

25,250 11,400 6,100
__________

9,300 930

7,750 675 -255 -27% May 22, 2003

Itemized deductions are assumed to be 18 percent of AGI under current law.

Composition of Tax Reduction 2: Acceleration of Reduction in Marriage Penalty
(larger standard deduction for joint filers)

155 100
__________

Lower tax rate on dividends

Total ……………………………………………...………………………….255
2

Due to possible interactions among items in the Jobs and Growth Tax Relief Reconciliation Act of 2003, the tax reduction attributable to each provision may depend on the order in which the tax reductions are calculated. The composition of the tax reductions in this example is based on the order of the provisions as shown.

Tax Relief in 2003 Under the Jobs and Growth Tax Relief Reconciliation Act of 2003
Example 6: Married Couple, Both Aged 65, with Income of $80,000 Current Law Taxable Pensions and Interest Dividends Social Security Benefits Total Income Less: Nontaxable Social Security benefits AGI Less: Deductions (Larger of Standard or Itemized1) Less: Personal Exemptions (2 @ $3,050) Taxable Income Federal Income Tax Tax Change: Amount Percent Department of the Treasury Office of Tax Analysis
1

Growth Package 55,500 4,500 20,000
__________

55,500 4,500 20,000
__________

80,000 3,000
__________

80,000 3,000
__________

77,000 13,860 6,100
__________

77,000 13,860 6,100
__________

57,040 9,107

57,040 7,430 -1,677 -18% May 22, 2003

Itemized deductions are assumed to be 18 percent of AGI under current law.

Composition of Tax Reduction 2: Acceleration of 10-Percent Rate Bracket Expansion Acceleration of Tax Rate Reductions (rates above 15 percent) Acceleration of Reduction in Marriage Penalty
(wider 15-percent tax bracket for joint filers)

100 192 935 450
__________

Lower tax rate on dividends

Total ……………………………………………...…………………………. 1,677
2

Due to possible interactions among items in the Jobs and Growth Tax Relief Reconciliation Act of 2003, the tax reduction attributable to each provision may depend on the order in which the tax reductions are calculated. The composition of the tax reductions in this example is based on the order of the provisions as shown.

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