Friday, July 23, 2010
Tax cuts enacted in 2001 and 2003 are to expire in January unless Congress renews some or all of them. The cost of extending them by a decade: nearly $3 trillion. The highlights:
Income tax rates were reduced, to a bottom rate of 10 percent and a top marginal 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 Alternative Minimum Tax is adjusted each year to spare more than 30 million middle-income families from a tax increase averaging $3,700.
Sources: Joint Committee on Taxation; Tax Policy Center; Associated Press
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