On May 28, 2003, President Bush signed the Jobs and Growth & Tax Relief Reconciliation Act of 2003 into law. Because the Act is intended to quickly boost the economy, many provisions will take effect this year.

Many taxpayers will benefit from certain provisions of this law in the near future. Some taxpayers with children may have received checks, similar to those that were issued in 2001 for the rate reduction credit. Many taxpayers will see reductions in the amount of withholding from their paychecks.

Listed below are the major provisions of the Act. To find out more about each provision, click on the heading.

Child Credit Increased. For 2003 and 2004, the child credit has been increased from $600 to $1,000 per eligible child. Like the rate reduction credit in 2001, this credit has been accelerated for 2003. Based on information from 2002 returns, most taxpayers who have one or more eligible children received a check sometime in the summer or fall of 2003. The check was for up to $400 per eligible child.

Standard Deduction for Married Taxpayers Increased. The standard deduction for married taxpayers filing a joint return has been increased to 200% of the single taxpayer’s standard deduction. This eliminates part of the so-called "marriage penalty" for 2003 and 2004.

15% Tax Bracket Increased for Married Taxpayers. The size of the 15% tax bracket has been increased so that it is twice the size of the 15% tax bracket for single taxpayers. This eliminates another part of the "marriage penalty" for 2003 and 2004.

All Tax Rates Reduced. For 2003 and 2004, all tax rates are reduced, and the 10% tax bracket has been increased.

Capital Gains Tax Decreased. The tax rates have been decreased for long-term capital gains, for tax years that end after May 5, 2003.

Taxation of Dividends. For tax years beginning after 2002, qualified dividend income will be taxed at the 5%/10%/15% capital gains tax rate. Qualified dividends include those paid by both domestic corporations and qualified foreign corporations.

Bonus Depreciation Increased. For 2003 and 2004, bonus depreciation has been increased from 30% to 50% for qualifying property.

Section 179 Expense Deduction Increased. For 2003, 2004 and 2005, the Section 179 expense limit has been increased from $25,000 to $100,000. The phaseout for these years has been increased from $200,000 to $400,000.

Alternative Minimum Tax (AMT) Exemptions Increased. AMT exemption amounts have been increased for both married and single taxpayers.

Other Provisions for Corporations. For tax years beginning after 2002, the personal holding company tax rate and accumulated earnings tax rate have been lowered to 15%. The collapsible corporation rules of Section 341 have been repealed. Also, 17% of any corporation estimate installment that was otherwise due in September 2003 was not due until October 1, 2003.

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