2003 Tax Cuts Details from Brookwood Tax Service - Federal and state income tax preparation & tax planning services

This page last updated on
July 30, 2003

2003 Tax Cut Law Provisions

The 2003 tax cut moves up already-planned reductions in tax rates to this year, retroactive to January of 2003. The top tax rate drops from 38.6% to 35% The child tax credit maximum amount increases from $600 to $1,000 for this year and next. The tax rate of stock dividends and long-term capital gains drops to 15%. Small businesses purchasing new business assets this year of $400,000 or less can immediately write off up to $100,000 of that capital spending under code Section 179, PLUS take an extra 50% bonus depreciation above the regular depreciation tables (up from 30%).

Check the details in the Treasury Department's summary of the new tax provisions.

According to Congressional and administration participants in the 2003 tax cut law negotiations, the intent of passing the bill before the Memorial Day holiday is to allow time so the IRS can distribute new, reduced tax withholding tables to employers to take effect with July paychecks.

In addition, taxpayers who qualified for the child tax credit in 2002 will receive checks similar to the 2001 tax rebate checks this summer. The checks will pay the additional 2003 child tax credit in advance, and will total $400 for each child (up to two) that qualified for the child tax credit on taxpayers' 2002 returns. See Check Mailing Schedule Here!

The increase in the Section 179 write-off ALSO adds off-the-shelf computer software to the list of business assets that can be written off in the year of purchase. There are other details in the new tax cut law that likely will come out over the next few days and weeks. For a bit more detail on some aspects of the law, check the Congressional Conference Committee Summary.

The U.S. Treasury estimates that under the 2003 tax cut law, a married couple with one child and income of $40,000 will receive a tax cut of about $732, a decline of 33% from their 2002 federal tax bill. For a married couple with two children and income of $75,000, the Treasury projects a tax cut of $1,122, a decline of 19% from their 2002 tax bill. A single person with no children earning $126,000 this year, including $2,000 in dividends and $4,000 in long-term capital gains will receive a tax cut of about $1,867 for a decline of about 8%.

Read Treasury Department examples of projected tax cuts for several families.

Read The Treasury Department's state-by-state breakdown of the numbers of taxpayers who will receive income tax reductions under the various provisions of the 2003 tax cut law.

READ ALL ABOUT IT! CCH, one of the leading publishers of tax research materials for tax professionals has published an overview of the 2003 tax cut law for taxpayers. Purchase a copy from Amazon.com, by linking from our Income Tax Books page.

If you have a specific question regarding some provision of the new tax cut law that we might be able to answer for you, please send us a 2003 Tax Cut Inquiry via e-mail.

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