·        Individual income tax rates have been reduced.  The former 27%, 30%, 35%, and 38.6% rates have been lowered to 25%, 28%, 33%, and 35%, respectively.  These new lower rates are in effect from January 1, 2003 through December 31, 2010.  The IRS has directed employers to use new wage withholding tables reflecting the tax rate changes as soon as possible, but no later than July 1, 2003. Click HERE to see new tax tables.

·        The tax on dividend income has been reduced.  For most taxpayers, the maximum rate will drop to 15% through 2008.  For low-income individuals, the maximum rate will be 5% through 2007.  Lower income brackets will enjoy tax-free dividends in 2008.

·        Long-term capital gains tax has also been reduced.  The maximum rate for most long-term capital gain falls to 15% through 2008.  For individuals in the 10% and 15% tax brackets, the capital gains rate is reduced to 5% through 2007 and to zero for 2008.

·        The child tax credit was increased from $600 to $1,000 per child for 2003 and 2004. Starting in July, most taxpayers who qualify for this credit will receive advance payments based on filing status and income shown on their 2002 tax returns.

·        Some relief has been provided for the marriage penalty.  The standard deduction for married taxpayers filing a joint return will be twice that of single taxpayers for 2003 and 2004.  Also, the 15% tax bracket is twice the size of that bracket for single individuals for 2003 and 2004.

·        The AMT exemption amount has increased.  The individual alternative minimum tax exemption has increased by $4,500 for single taxpayers and by $9,000 for married taxpayers filing joint returns for 2003 and 2004.  This increase should reduce the number of taxpayers subject to AMT.

·        Bonus depreciation has been increased and extended.  For property that qualifies for the additional 30% first-year depreciation under last year’s tax act, the first-year bonus depreciation percentage has increased to 50%.  This 50% first-year bonus depreciation applies to property acquired and placed in service between May 6, 2003 and December 31, 2004.

·        Section 179 expensing limits have increased.  The maximum amount that can be expensed has increased from $25,000 to $100,000 for property placed in service during 2003 through 2005.