III. Individual Income Tax Rate Reductions
ØA. This is the third tax reduction since 2001,
including The Economic Growth
and Tax Relief Reconciliation Act of 2001 with 10 years of rate cuts for individuals and the Job Creation and Worker
Assistance Act of 2002 which
give specific tax benefits for businesses. The new Act accelerates some of the previously enacted rate cuts.
ØB. For 2003, the income levels for the 10% regular
income tax rate rise from $6,000
to $7,000 for single individuals and from $12,000 to $14,000 for married filing jointly. For 2004, the ceiling
for this rate bracket is indexed,
and for 2005, it is scheduled to revert back to $6,000 and $12,000, increasing again in 2008 to $7,000 and $14,000
and then indexed for
inflation.
ØC. Other rates are reduced as well, from 38.6% to
35%; from 35% to 33%; from
30% to 28%; and from 27% to 25%. Generally, while these rate reductions, coupled with the broadening of the 10%
bracket, will reduce the
tax burden nicely, they are not dramatic enough to trigger any tax planning of shifting income or deductions.
ØD. The
rate reductions are retroactive to January 1, 2003, and withholding tables will be adjusted for the remainder of the year to
increase paychecks and provide
a cash stimulus to the economy.