Definition of jobs and growth tax relief reconciliation act of 2003

legistlation providing significant tax relief for individuals, investors, and businesses that was signed into law on May 28, 2003. The major provisions of the law are:

1. Accelerated expansion of the 10% tax bracket. The 10% tax bracket applies to the first $7,000 of taxable income for singles and $14,000 for married couples filing jointly. Beginning in 2004, the taxable income levels for the 10% bracket will be adjusted for inflation.
2. Accelerated reduction of individual income tax brackets above 15%. The new tax brackets above 15% are 25%, 28%, 33%, and 35%.
3. Accelerated increase in the child credit. Starting in 2003, the child tax credit is increased to $1,000.
4. Elimination of the marriage penalty. The standard deduction for married couples filing jointly becoms twice the deduction for single taxpayers. The size of the 15% tax bracket is widened so that the married level of income is double the size of the single level of income.
5. Increase in AMT exemption amount for individuals. The exemption amount is increased to $58,000 for married couples filing jointly, $29,000 for married couples filing singly, and $40,250 for singles.
6. Adjustments in withholding tables. The IRS changed its withholding tables so that less tax is withheld from workers' paychecks because of the reductions in tax rates.
7. Long-term capital gains tax rates reduced to 5% and 15%. Capital gains tax rates were reduced from 10% to 5% and from 20% to 15% for asset sales after May 5, 2003 for assest held a year or longer. Gains from property purchased after 2000 and held more than five years are taxed at an 8% capital gains rate.
8. Tax rate on noncorporate taxpayers' dividend income cut to 5% and 15%. Dividends are taxed at 5% for those in the two lowest tax brackets, and 15% for those in the higher tax brackets. Previously, dividends had been taxed at regular income tax rates.
9. Expanded expensing election for businesses. The amount of expense that a business can deduct in the year it buys equipment rises from $25,000 to $100,000, as an incentive to increase capital expenditures.
10. Bonus first-year depreciation allowance liberalized. The bonus for first-year depreciation for property bought after May 5, 2003 is boosted from 30% to 50%. This bonus applies to equipment, property, and autos.
11. Accumulated earnings tax and personal holding company tax rates reduced to 15%. Formerly, accumulated earnings and profits that were taxed at regular income tax rates as high as 38.6% were reduced to a 15% tax rate.
12. Collapsible corporation rules repealed. A collapsible corporation is one that had assets that had appreciated in value and before the corporation realized the increased value from the property, was liquidated, or made a distribution to shareholders. Such gains were formerly taxed at ordinary income rates. After the repeal of these rules, distributions are taxed at capital gains rates.