President Bush signed into law on May 28, 2003 “The Jobs and Growth Tax Relief Reconciliation Act of 2003”. The goal of this act was to increase certain deductions and benefits to help stimulate the economy. Here are a few highlights of how this law affects the individual taxpayer.
Lower Tax Rates – The following tax rate brackets have been reduced to the rate shown – 27% to 25%, 30% to 28%, 35% to 33% and 38.6% to 35%.
Higher Child Tax Credit – The maximum child tax credit has
increased from $600 to $1,000 per child. In fact, starting at the end of July, the IRS will be sending checks to taxpayers who claimed the child tax credit for 2002. The checks are an advance payment of the increased portion of the child tax credit for 2003, ($1,000-$600=$400) up to a maximum of $400 per child. The amount sent will be based on the 2002 tax return information using the number of qualifying children under age 17 as of December 31, 2003. You do not have to take any action, as the IRS will automatically send the amounts calculated.

Capital Gains Tax Reductions – The maximum tax rate on net capital gains (net long-term capital gains reduced by any net short-term capital losses) has been reduced from 20% to 15% for property sold or otherwise disposed of after May 5, 2003.

Dividend Income Tax Reductions – The maximum tax rate on dividends paid by most domestic and foreign corporations after December 31, 2002 will be 15%.

Marriage Penalty Reductions – In the past, there have been some inequities concerning taxes for Married Filing Jointly filers vs. Single filers. This act has increased the standard deduction for married taxpayers filing jointly to twice that of the single taxpayers. Also, the 10% and 15% tax bracket for married filing jointly has been expanded to twice that of single filers.

As always, there are caveats and disclaimers for each adjustment described above. Please discuss any questions with your professional tax advisor.