Citizens for Tax Justice 202-299-1066 …

Citizens for Tax Justice                    202-299-1066                   October 13, 2006, 3 pp.

        CTJ's Bush Tax Cut Scorecard: Phase-in dates for the Bush tax cuts,
                    including 2006 legislation (calendar years)
After half a dozen major tax cuts in the first six years of the Bush administration--many of which
have different phase-in dates, and almost all of which sunset completely after 2010--you need a
scorecard to keep track of which cuts take effect each year. Here's your scorecard: a year-by-year list
of federal tax cuts (and hikes) taking effect between 2001 and 2010. Tax increases are presented in
red bold type. A handy one-page chart follows the list.

2001:                                                $11,000. Other retirement savings changes take
# Personal income tax rates of 39.6%, 36%, 31% and   effect. IRA tax credits for lower-income workers
28% are each reduced by one percentage point,        established.
effective July 1, 2001--in essence, a half point
reduction for calendar year 2001.                    2003:
# A new 10 percent income tax bracket is intro-      # The top four income tax rates are again cut to
duced on the first $12,000 of taxable income for     35%, 33%, 28% and 25%.
married couples, $10,000 for single parents and      # Income amounts for the new 10 percent tax
$6,000 for others (these amounts are not indexed     bracket increased to $14,000 for couples and
for inflation in future years).                      $7,000 for childless singles (the $10,000 amount
# The per-child credit is increased from $500 to     for single parents remains unchanged). These
$600, with expanded refundability based on 10% of    amounts are indexed in 2004 through to 2010.
earnings over $10,000 (the $10,000 figure is ad-     # The maximum tax rate on capital gains income
justed in future years for inflation).               is cut to 16.7%, effective May 7, 2003.
# Alternative minimum tax (AMT) exemptions are       # The maximum tax rate on dividend income is
increased by $4,000 for married couples and $2,000   cut from 35% (the same as earned income) to 15%.
for singles.
                                                     # Child tax credit is increased from $600 to
                                                     $1,000, with refundability based on 10% of earn-
2002:                                                ings over $10,000 (the $10,000 figure is adjusted
# The top four income tax rates are slightly         for inflation).
reduced to 38.6%, 35%, 30%, and 27%.
                                                     # The standard deduction for married couples is
# The income range over which the benefits           increased to twice the single amount until 2010.
of the earned-income tax credit (EITC) phase-out     # Starting point for the 25% tax bracket for
is increased by $1,000 for married couples (the      married couples is increased to 200% of the single
$1,000 is not indexed).                              bracket starting point until 2010.
# The top estate tax rate is cut from 55% to 50%;    # Maximum allowable expenses for dependent
a feature in previous law that recaptures the        care credit raised from $2,400 to $3,000 for one
benefit of lower tax rates is repealed; the estate   child under 13 and from $4,800 to $6,000 for two
tax credit is converted to an exemption (worth       or more children; maximum credit rate increases
more for larger estates) and the basic estate        from 30% to 35%; the rate of the credit is phased
tax exemption is increased from $700,000 to $1       down to 20% between $15,001 and $43,001 in
million ($2 million for couples).                    income rather than from $10,001 to $28,001.
# The federal estate tax credit for state estate     # Alternative minimum tax exemption levels are
taxes paid is reduced from 100% to 75%.              increased by $9,000 for married couples and
# The annual contribution limit for IRAs is          $4,500 for singles.
increased to $3,000 (from $2,000). The limit on      # The top estate tax rate is cut from 50% to 49%.
elective deferrals is raised from $10,000 to
# The federal estate tax credit for state estate     # Alternative minimum tax exemption levels are
taxes paid is reduced from 75% to 50%.               reduced by $17,550 for married couples and
# Limit on elective retirement savings deferrals     $8,750 for singles.
raised from $11,000 to $12,000.
                                                     2008:
2004:                                                # The earned-income tax credit phase-out range
# The maximum tax rate on capital gains income       is increased by an additional $1,000 for married
is cut to 15%.                                       couples (the $3,000 total increase is indexed for
# The child tax credit continues to be $1,000 with   inflation after 2008).
further expansion in refundability based on 15% of   # Current law's phase-out of the personal
earnings above $10,750 (The $10,750 is indexed       exemption and disallowance of a portion of
for inflation in later years).                       itemized deductions at high income levels are
# Top estate tax rate cut from 49% to 48%. The       reduced by two-thirds (up from a 1/3 reduction).
exemption is increased to $1.5 million ($3 million   # IRA annual contribution limit increased to
for married couples).                                $5,000 (indexed thereafter).
# The federal estate tax credit for state estate
taxes paid is reduced from 50% to 25%.               2009:
# The limit on elective retirement savings           # The estate tax exemption is increased to $3.5
deferrals is raised from $12,000 to $13,000.         million ($7 million for couples).

2005:                                                2010:
# Earned-income tax credit phase-out range           # Current law's phase out of the personal
increased by an additional $1,000 for married        exemption and disallowance of a portion of
couples (the $2,000 total increase is not indexed    itemized deductions at high income levels are fully
for inflation).                                      repealed.
# The top estate tax rate is cut from 48% to 47%.    # The estate tax is fully repealed (gift tax retained;
# The federal estate tax credit for state estate     limited carryover basis starts).
taxes paid is eliminated.
# IRA annual contribution limit increased to         2011:
$4,000. The limit on elective deferrals is raised    # All of the Bush tax cuts (except for certain
from $13,000 to $14,000.                             pension tax breaks) are repealed. All provisions of
                                                     the personal income, estate, and gift taxes return
2006:                                                to their original 2000 levels. However, due to a
                                                     gradual increase in the estate tax exemption
# Current law's phase-out of the personal exemp-
                                                     enacted during the Clinton Administration, the
tion and disallowance of a portion of itemized
                                                     estate tax exemption would fall to $1 million per
deductions at high income levels are reduced by
                                                     spouse, rather than the $675,000 per spouse seen
one-third.
                                                     in 2000.
# The top estate tax rate is cut from 47% to 46%.
The exemption is also increased to $2 million ($4
million for couples).
# The limit on elective retirement savings
deferrals is raised from $14,000 to $15,000
(indexed thereafter).

2007:
# The top estate tax rate is cut from 46% to 45%.
Scheduled Changes in the Bush Tax Cuts, Including Impact of Legislation Enacted Through August 2006
tax cuts blue, tax hikes red       Pre-Bush       2001       2002        2003        2004             2005       2006      2007      2008      2009         2010         2011
Income tax brackets
           na in 2000                 na          10%        10%         10%         10%              10%       10%        10%       10%       10%          10%           na
              15%                    15%          15%        15%         15%         15%              15%       15%        15%       15%       15%          15%          15%
              28%                    28%         27.5%       27%         25%         25%              25%       25%        25%       25%       25%          25%          28%
              31%                    31%         30.5%       30%         28%         28%              28%       28%        28%       28%       28%          28%          31%
              36%                    36%         35.5%       35%         33%         33%              33%       33%        33%       33%       33%          33%          36%
            39.6%                   39.6%        39.1%      38.6%        35%         35%              35%       35%        35%       35%       35%          35%         39.6%
10% rate applies to taxable
                                      na      $6,000/10,000/12,000 $7,000/10,000/14,000, indexed                                                                           na
income over: (single/HOH/MFJ)
Capital gains max                    20%          20%        20%        16.7%        15%              15%       15%        15%       15%       15%          15%          20%
Dividends max                       39.6%        39.1%      38.6%        15%         15%              15%       15%        15%       15%       15%          15%         39.6%
Per child credit                     $ 500       $ 600       $ 600      $ 1,000     $ 1,000    $ 1,000   $ 1,000          $ 1,000   $ 1,000   $ 1,000      $ 1,000       $ 500
  Refundability of credit          limited    10% of earnings > $10,000 (indexed)   15% > $10,750 (indexed)                                                               old
Standard deduction for married
couples as % of single SD           167%         167%       167%         200%       200%             200%       200%      200%      200%      200%         200%         167%
Married 15% bracket endpoint
                                    167%         167%       167%         200%       200%             200%       200%      200%      200%      200%         200%         167%
as % of single endpoint
Married EITC phase-out
start and end points up by                                   +1,000 (not indexed)            +2,000 (not indexed)              +3,000 indexed thereafter                  na
Dependent care credit             old = $2400/4800                    to $3000/6000, 35% phase out starts at $15K (up from $2400/4800, 30% and $10K)                      old
AMT exemption
   Couples                         45,000        49,000     49,000      58,000      58,000           58,000     62,550    45,000    45,000    45,000       45,000    45,000
   Singles                         33,750        35,750     35,750      40,250      40,250           40,250     42,500    33,750    33,750    33,750       33,750    33,750
Personal exemption phase-out                                                                                    minus 1/3           minus 2/3             repealed reinstated
Itemized deduction disallowance                                                                                 minus 1/3           minus 2/3             repealed reinstated
Sales Tax Deduction                  none                    none                              yes                                   none                             none
Estate tax
 Top rate                            55%          55%         50%        49%         48%              47%       46%        45%       45%       45%        repealed       55%
 Credit (exemption equivalent)     $675,000      $675,000    1 mill      1 mill     1.5 mill         1.5 mill   2 mill     2 mill    2 mill   3.5 mill    repealed       1 mill
  Gift tax (2010 only)                                                                                                                                   40%,$1 mill exemption
  Carryover basis (2010 only)                                                                                                                            1.3 mill, 3 mill to spouse
  Credit for State Tax            100%                          75%         50%         25%          repealed                                                              100%
Source: Citizens for Tax Justice, October 2006