Jobs and Growth Tax Relief Reconciliation Act of 2003

Jobs and Growth Tax Relief Reconciliation Act of 2003
Great Seal of the United States
Long titleAn act to provide for reconciliation pursuant to section 201 of the concurrent resolution on the budget for fiscal year 2004.
Acronyms (colloquial)JGTRRA
Enacted bythe 108th United States Congress
Citations
Public lawPub. L. 108–27 (text) (PDF)
Statutes at Large117 Stat. 752
Legislative history
Major amendments
Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010

The Jobs and Growth Tax Relief Reconciliation Act of 2003 ("JGTRRA", Pub. L. 108–27 (text) (PDF), 117 Stat. 752), was passed by the United States Congress on May 23, 2003, and signed into law by President George W. Bush on May 28, 2003. Nearly all of the cuts (individual rates, capital gains, dividends, estate tax) were set to expire after 2010.[1]

Among other provisions, the act accelerated certain tax changes passed in the Economic Growth and Tax Relief Reconciliation Act of 2001, increased the exemption amount for the individual Alternative Minimum Tax, and lowered taxes of income from dividends and capital gains. The 2001 and 2003 acts are known together as the "Bush tax cuts".

Description of cuts

JGTRRA continued on the precedent established by the 2001 EGTRRA, while increasing tax reductions on investment income from dividends and capital gains.

Accelerated credits and rate reductions

JGTRRA accelerated the gradual rate reduction and increase in credits passed in EGTRRA. The maximum tax rate decreases originally scheduled to be phased into effect in 2006 under EGTRRA were retroactively enacted to apply to the 2003 tax year. Also, the child tax credit was increased to what would have been the 2010 level, and "marriage penalty" relief was accelerated to 2009 levels. In addition, the threshold at which the alternative minimum tax applies was also increased.

Investments

JGTRRA increased both the percentage rate at which items can be depreciated and the amount a taxpayer may choose to expense under Section 179, allowing them to deduct the full cost of the item from their income without having to depreciate the amount.

In addition, the capital gains tax decreased from rates of 8%, 10%, and 20% to 5% and 15%. Capital gains taxes for those currently paying 5% (in this instance, those in the 10% and 15% income tax brackets) are scheduled to be eliminated in 2008. However, capital gains taxes remain at the regular income tax rate for property held less than one year.

Certain categories, such as collectibles, remained taxed at existing rates, with a 28% cap. In addition, taxes on "qualified dividends" were reduced to the capital gains levels. "Qualified dividends" includes most income from non-foreign corporations, real estate investment trusts, and credit union and bank "dividends" that are nominally interest.

Legislative history

Final House vote:

Vote by Party Yea Nay
Republicans 224 99.6% 1 0.4%
Democrats 7 3.4% 198 96.6%
Independents 0 0.0% 1 100%
Total 231 53.6% 200 46.4%
Not voting 4 0

Final Senate vote:

Vote by party Yea Nay
Republicans 48 3
Democrats 2 46
Independents 0 1
Total 50 50
Vice President Dick Cheney (R): Yea

Tax bracket comparison

The tax cuts enacted by this legislation were retroactive to January 1, 2003, and first applied to taxes filed for the 2003 tax year. These individual rate reductions are scheduled to sunset on January 1, 2011, along with the Economic Growth and Tax Relief Reconciliation Act of 2001 unless further legislation is enacted to extend or make permanent its changes.[2] This comparison shows how the ordinary taxable income brackets for each filing status were changed.

Single

Tax Year 2002[3] Tax Year 2003[4]
Income level Tax rate Income level Tax rate
up to $6,000 10% up to $7,000 10%
$6,000 - $27,950 15% $7,000 - $28,400 15%
$27,950 - $67,700 27% $28,400 - $68,800 25%
$67,700 - $141,250 30% $68,800 - $143,500 28%
$141,250 - $307,050 35% $143,500 - $311,950 33%
over $307,050 38.6% over $311,950 35%

Married filing jointly or qualifying widow or widower

Tax Year 2002[3] Tax Year 2003[4]
Income level Tax rate Income level Tax rate
up to $12,000 10% up to $14,000 10%
$12,000 - $46,700 15% $14,000 - $56,800 15%
$46,700 - $112,850 27% $56,800 - $114,650 25%
$112,850 - $171,950 30% $114,650 - $174,700 28%
$171,950 - $307,050 35% $174,700 - $311,950 33%
over $307,050 38.6% over $311,950 35%

Married filing separately

Tax Year 2002[3] Tax Year 2003[4]
Income level Tax rate Income level Tax rate
up to $6,000 10% up to $7,000 10%
$6,000 - $23,350 15% $7,000 - $28,400 15%
$23,350 - $56,425 27% $28,400 - $57,325 25%
$56,425 - $85,975 30% $57,325 - $87,350 28%
$85,975 - $153,525 35% $87,350 - $155,975 33%
over $153,525 38.6% over $155,975 35%

Head of household

Tax Year 2002[3] Tax Year 2003[4]
Income level Tax rate Income level Tax rate
up to $10,000 10% up to $10,000 10%
$10,000 - $37,450 15% $10,000 - $38,050 15%
$37,450 - $96,700 27% $38,050 - $98,250 25%
$96,700 - $156,600 30% $98,250 - $159,100 28%
$156,600 - $307,050 35% $159,100 - $311,950 33%
over $307,050 38.6% over $311,950 35%

See also

References

  1. ^ "Tax Policy Under President Bush". Cato Institute.
  2. ^ Bischoff, Bill (2003-05-27). "What the Bush Tax Cut Means for You". smartmoney.com. SmartMoney. Retrieved 2008-10-07.
  3. ^ a b c d "2002 1040 Instructions" (PDF). IRS.gov. United States Internal Revenue Service. p. 75. Retrieved 2008-10-07.
  4. ^ a b c d "2003 1040 Instructions" (PDF). IRS.gov. United States Internal Revenue Service. p. 74. Retrieved 2008-10-07.
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