Expiring Bush Tax Cuts
The Associated Press - AP - Mon Nov 01, 2:44AM CDT
Tax cuts enacted in 2001 and 2003 are to expire in January unless Congress renews them.
The highlights:
—Income tax rates were reduced, to a bottom rate of 10 percent and a top rate of 35 percent. If the cuts expire, the bottom rate would increase to 15 percent, the top rate would rise to 39.6 percent, and several rates in between would increase as well.
—The child tax credit was increased from $500 per child to $1,000 per child.
—Marriage penalty relief. The standard deduction for married couples was increased, easing the tax hit on many married couples.
—Capital gains taxes were cut, with the top rate dropping from 20 percent to 15 percent.
—Taxes on dividends were cut. Instead of taxing dividends at the same rate as earned income, with a top marginal rate of 39.6 percent, the top rate was set at 15 percent.
—The federal estate tax, which had a top rate of 55 percent, was gradually reduced, then repealed for 2010. It is scheduled to return to 55 percent next year, with a $1 million exemption.
—The Alternative Minimum Tax is adjusted each year to spare more than 30 million middle-income families from a tax increases averaging $3,700. The tax was enacted in 1969 to make sure wealthy people couldn't avoid taxes altogether, but it wasn't indexed for inflation.
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Sources: Joint Committee on Taxation; Tax Policy Center.
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