Dictionary of Banking Terms: Economic Recovery Tax Act
Economic Recovery Tax Act
federal law enacted in 1981 that cut taxes across-the-board, modified the depreciation tables used by businesses in writing off capital equipment, and indexed tax brackets to the inflation rate. The act reduced the individual tax rate by 23%, cut the corporate capital gains tax to a maximum of 20%, and introduced the accelerated cost recovery system used by businesses in calculating accelerated depreciation.
The act also reduced the federal tax on estate and gift taxes, making the first $600,000 tax free after 1987, and allowed an unlimited marital deduction on property transfers as provided by a will.
