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The Jobs and Growth Tax Relief Reconciliation Act of 2003 ("JGTRRA", Pub. L. 108–27 (text) (PDF), 117 Stat. 752), was passed by the United States Congress on May 23, 2003, and signed into law by President George W. Bush on May 28, 2003. Nearly all of the cuts (individual rates, capital gains, dividends, estate tax) were set to expire after 2010.
 | |
| Long title | An act to provide for reconciliation pursuant to section 201 of the concurrent resolution on the budget for fiscal year 2004. |
|---|---|
| Acronyms (colloquial) | JGTRRA |
| Enacted by | the 108th United States Congress |
| Citations | |
| Public law | Pub. L. 108–27 (text) (PDF) |
| Statutes at Large | 117 Stat. 752 |
| Legislative history | |
| |
| Major amendments | |
| Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 | |
Among other provisions, the act accelerated certain tax changes passed in the Economic Growth and Tax Relief Reconciliation Act of 2001, increased the exemption amount for the individual Alternative Minimum Tax, and lowered taxes of income from dividends and capital gains. The 2001 and 2003 acts are known together as the "Bush tax cuts".
Description of cuts
JGTRRA continued on the precedent established by the 2001 EGTRRA, while increasing tax reductions on investment income from dividends and capital gains.
Accelerated credits and rate reductions
JGTRRA accelerated the gradual rate reduction and increase in credits passed in EGTRRA. The maximum tax rate decreases originally scheduled to be phased into effect in 2006 under EGTRRA were retroactively enacted to apply to the 2003 tax year. Also, the child tax credit was increased to what would have been the 2010 level, and "marriage penalty" relief was accelerated to 2009 levels. In addition, the threshold at which the alternative minimum tax applies was also increased.
Investments
JGTRRA increased both the percentage rate at which items can be depreciated and the amount a taxpayer may choose to expense under Section 179, allowing them to deduct the full cost of the item from their income without having to depreciate the amount.
In addition, the capital gains tax decreased from rates of 8%, 10%, and 20% to 5% and 15%. Capital gains taxes for those currently paying 5% (in this instance, those in the 10% and 15% income tax brackets) are scheduled to be eliminated in 2008. However, capital gains taxes remain at the regular income tax rate for property held less than one year.
Certain categories, such as collectibles, remained taxed at existing rates, with a 28% cap. In addition, taxes on "qualified dividends" were reduced to the capital gains levels. "Qualified dividends" includes most income from non-foreign corporations, real estate investment trusts, and credit union and bank "dividends" that are nominally interest.
Legislative history
Final House vote:
| Vote by Party | Yea | Nay | ||
|---|---|---|---|---|
| Republicans | 224 | 99.6% | 1 | 0.4% |
| Democrats | 7 | 3.4% | 198 | 96.6% |
| Independents | 0 | 0.0% | 1 | 100% |
| Total | 231 | 53.6% | 200 | 46.4% |
| Not voting | 4 | 0 | ||
Final Senate vote:
| Vote by party | Yea | Nay |
|---|---|---|
| Republicans | 48 | 3 |
| Democrats | 2 | 46 |
| Independents | 0 | 1 |
| Total | 50 | 50 |
| Vice President Dick Cheney (R): Yea | ||
Tax bracket comparison
The tax cuts enacted by this legislation were retroactive to January 1, 2003, and first applied to taxes filed for the 2003 tax year. These individual rate reductions were scheduled to sunset on January 1, 2011, along with the Economic Growth and Tax Relief Reconciliation Act of 2001 unless further legislation was enacted to extend or make permanent its changes. This comparison shows how the ordinary taxable income brackets for each filing status were changed.
Single
| Tax Year 2002 | Tax Year 2003 | ||
| Income level | Tax rate | Income level | Tax rate |
|---|---|---|---|
| up to $6,000 | 10% | up to $7,000 | 10% |
| $6,000 - $27,950 | 15% | $7,000 - $28,400 | 15% |
| $27,950 - $67,700 | 27% | $28,400 - $68,800 | 25% |
| $67,700 - $141,250 | 30% | $68,800 - $143,500 | 28% |
| $141,250 - $307,050 | 35% | $143,500 - $311,950 | 33% |
| over $307,050 | 38.6% | over $311,950 | 35% |
Married filing jointly or qualifying widow or widower
| Tax Year 2002 | Tax Year 2003 | ||
| Income level | Tax rate | Income level | Tax rate |
|---|---|---|---|
| up to $12,000 | 10% | up to $14,000 | 10% |
| $12,000 - $46,700 | 15% | $14,000 - $56,800 | 15% |
| $46,700 - $112,850 | 27% | $56,800 - $114,650 | 25% |
| $112,850 - $171,950 | 30% | $114,650 - $174,700 | 28% |
| $171,950 - $307,050 | 35% | $174,700 - $311,950 | 33% |
| over $307,050 | 38.6% | over $311,950 | 35% |
Married filing separately
| Tax Year 2002 | Tax Year 2003 | ||
| Income level | Tax rate | Income level | Tax rate |
|---|---|---|---|
| up to $6,000 | 10% | up to $7,000 | 10% |
| $6,000 - $23,350 | 15% | $7,000 - $28,400 | 15% |
| $23,350 - $56,425 | 27% | $28,400 - $57,325 | 25% |
| $56,425 - $85,975 | 30% | $57,325 - $87,350 | 28% |
| $85,975 - $153,525 | 35% | $87,350 - $155,975 | 33% |
| over $153,525 | 38.6% | over $155,975 | 35% |
Head of household
| Tax Year 2002 | Tax Year 2003 | ||
| Income level | Tax rate | Income level | Tax rate |
|---|---|---|---|
| up to $10,000 | 10% | up to $10,000 | 10% |
| $10,000 - $37,450 | 15% | $10,000 - $38,050 | 15% |
| $37,450 - $96,700 | 27% | $38,050 - $98,250 | 25% |
| $96,700 - $156,600 | 30% | $98,250 - $159,100 | 28% |
| $156,600 - $307,050 | 35% | $159,100 - $311,950 | 33% |
| over $307,050 | 38.6% | over $311,950 | 35% |
See also
- Taxation in the United States
- Starve the beast – Post 1970s taxation/budget policy
References
- "Tax Policy Under President Bush". Cato Institute.
- Bischoff, Bill (2003-05-27). "What the Bush Tax Cut Means for You". smartmoney.com. SmartMoney. Retrieved 2008-10-07.
- "2002 1040 Instructions" (PDF). IRS.gov. United States Internal Revenue Service. p. 75. Retrieved 2008-10-07.
- "2003 1040 Instructions" (PDF). IRS.gov. United States Internal Revenue Service. p. 74. Retrieved 2008-10-07.
External links
- Full text of the Act
- Summary of the Act(pdf file)
- Senate Roll Call Vote – Jobs and Growth Tax Relief Reconciliation Act
- The President's Agenda for Tax Relief
- Effective Federal Tax Rates Under Current Law, 2001 to 2014
- Special Report: Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), Prof. John Wachowicz at the University of Tennessee
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The Jobs and Growth Tax Relief Reconciliation Act of 2003 JGTRRA Pub L 108 27 text PDF 117 Stat 752 was passed by the United States Congress on May 23 2003 and signed into law by President George W Bush on May 28 2003 Nearly all of the cuts individual rates capital gains dividends estate tax were set to expire after 2010 Jobs and Growth Tax Relief Reconciliation Act of 2003Long titleAn act to provide for reconciliation pursuant to section 201 of the concurrent resolution on the budget for fiscal year 2004 Acronyms colloquial JGTRRAEnacted bythe 108th United States CongressCitationsPublic lawPub L 108 27 text PDF Statutes at Large117 Stat 752Legislative historyIntroduced in the House as H R 2 by Bill Thomas R CA on February 27 2003Committee consideration by House Ways and MeansPassed the House on May 9 2003 222 203 Passed the Senate on May 15 2003 51 49 Reported by the joint conference committee on May 23 2003 agreed to by the House on May 23 2003 231 200 and by the Senate on May 23 2003 50 50 the Vice President voted in the Affirmative Signed into law by President George W Bush on May 28 2003Major amendmentsTax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010 Among other provisions the act accelerated certain tax changes passed in the Economic Growth and Tax Relief Reconciliation Act of 2001 increased the exemption amount for the individual Alternative Minimum Tax and lowered taxes of income from dividends and capital gains The 2001 and 2003 acts are known together as the Bush tax cuts Description of cutsJGTRRA continued on the precedent established by the 2001 EGTRRA while increasing tax reductions on investment income from dividends and capital gains Accelerated credits and rate reductions JGTRRA accelerated the gradual rate reduction and increase in credits passed in EGTRRA The maximum tax rate decreases originally scheduled to be phased into effect in 2006 under EGTRRA were retroactively enacted to apply to the 2003 tax year Also the child tax credit was increased to what would have been the 2010 level and marriage penalty relief was accelerated to 2009 levels In addition the threshold at which the alternative minimum tax applies was also increased Investments JGTRRA increased both the percentage rate at which items can be depreciated and the amount a taxpayer may choose to expense under Section 179 allowing them to deduct the full cost of the item from their income without having to depreciate the amount In addition the capital gains tax decreased from rates of 8 10 and 20 to 5 and 15 Capital gains taxes for those currently paying 5 in this instance those in the 10 and 15 income tax brackets are scheduled to be eliminated in 2008 However capital gains taxes remain at the regular income tax rate for property held less than one year Certain categories such as collectibles remained taxed at existing rates with a 28 cap In addition taxes on qualified dividends were reduced to the capital gains levels Qualified dividends includes most income from non foreign corporations real estate investment trusts and credit union and bank dividends that are nominally interest Legislative historyFinal House vote Vote by Party Yea Nay Republicans 224 99 6 1 0 4 Democrats 7 3 4 198 96 6 Independents 0 0 0 1 100 Total 231 53 6 200 46 4 Not voting 4 0 Final Senate vote Vote by party Yea Nay Republicans 48 3 Democrats 2 46 Independents 0 1 Total 50 50 Vice President Dick Cheney R YeaTax bracket comparisonThe tax cuts enacted by this legislation were retroactive to January 1 2003 and first applied to taxes filed for the 2003 tax year These individual rate reductions were scheduled to sunset on January 1 2011 along with the Economic Growth and Tax Relief Reconciliation Act of 2001 unless further legislation was enacted to extend or make permanent its changes This comparison shows how the ordinary taxable income brackets for each filing status were changed Single Tax Year 2002 Tax Year 2003 Income level Tax rate Income level Tax rate up to 6 000 10 up to 7 000 10 6 000 27 950 15 7 000 28 400 15 27 950 67 700 27 28 400 68 800 25 67 700 141 250 30 68 800 143 500 28 141 250 307 050 35 143 500 311 950 33 over 307 050 38 6 over 311 950 35 Married filing jointly or qualifying widow or widower Tax Year 2002 Tax Year 2003 Income level Tax rate Income level Tax rate up to 12 000 10 up to 14 000 10 12 000 46 700 15 14 000 56 800 15 46 700 112 850 27 56 800 114 650 25 112 850 171 950 30 114 650 174 700 28 171 950 307 050 35 174 700 311 950 33 over 307 050 38 6 over 311 950 35 Married filing separately Tax Year 2002 Tax Year 2003 Income level Tax rate Income level Tax rate up to 6 000 10 up to 7 000 10 6 000 23 350 15 7 000 28 400 15 23 350 56 425 27 28 400 57 325 25 56 425 85 975 30 57 325 87 350 28 85 975 153 525 35 87 350 155 975 33 over 153 525 38 6 over 155 975 35 Head of household Tax Year 2002 Tax Year 2003 Income level Tax rate Income level Tax rate up to 10 000 10 up to 10 000 10 10 000 37 450 15 10 000 38 050 15 37 450 96 700 27 38 050 98 250 25 96 700 156 600 30 98 250 159 100 28 156 600 307 050 35 159 100 311 950 33 over 307 050 38 6 over 311 950 35 See alsoTaxation in the United States Starve the beast Post 1970s taxation budget policyReferences Tax Policy Under President Bush Cato Institute Bischoff Bill 2003 05 27 What the Bush Tax Cut Means for You smartmoney com SmartMoney Retrieved 2008 10 07 2002 1040 Instructions PDF IRS gov United States Internal Revenue Service p 75 Retrieved 2008 10 07 2003 1040 Instructions PDF IRS gov United States Internal Revenue Service p 74 Retrieved 2008 10 07 External linksWikisource has original text related to this article US Public Law 108 27 Full text of the Act Summary of the Act pdf file Senate Roll Call Vote Jobs and Growth Tax Relief Reconciliation Act The President s Agenda for Tax Relief Effective Federal Tax Rates Under Current Law 2001 to 2014 Special Report Jobs and Growth Tax Relief Reconciliation Act of 2003 JGTRRA Prof John Wachowicz at the University of Tennessee