Encyclopedia > Economic Growth and Tax Relief Reconciliation Act of 2001
The Economic Growth and Tax Relief Reconciliation Act of 2001 was a sweeping piece of tax legislation in the United States. It is commonly known by its abbreviation EGTRRA, often pronounced "egg-tra" or "egg-terra", and sometimes also known simply as the 2001 act, especially when it is clear the context of the discussion is regarding taxes. It made significant changes in several areas of the US Internal Revenue Code, including income tax rates, estate and gift tax exclusions, and qualified and retirement plan rules. In general the act lowered tax rates and simplified retirement and qualified plan rules such as for Individual retirement accounts, 401(k) plans, 403(b), and pension plans. The changes were so large and numerous that many, many books and analysis papers were published regarding the changes and how to best take advantage of them. A tax is a compulsory charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (e. ...
The Internal Revenue Service (IRS) is the United States government agency that collects taxes and enforces the tax laws. ...
Jump to: navigation, search This article needs to be cleaned up to conform to a higher standard of quality. ...
An Individual Retirement Account or IRA is a retirement plan account that provides some tax advantages for saving for retirement in the United States. ...
The 401(k) plan is a type of retirement plan available in the United States. ...
A 403(b) plan is a tax advantaged retirement savings plan available for non-profit employers in the United States. ...
Many of the tax reductions in EGTRRA were designed to be phased in over a period of up to 9 years. Many of these slow phase-ins were accelerated by the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), which removed the waiting periods for many of EGTRRA's changes. The Jobs and Growth Tax Relief Reconciliation Act of 2003 was passed by the United States Congress on May 23, 2003 and signed by President Bush five days later. ...
Sunset Provision One of the most notable characteristics of EGTRRA is that its provisions are designed to sunset, or revert to the provisions that were in effect before it was passed. EGTRRA will sunset on January 1, 2011 unless further legislation is enacted to make its changes permanent. The sunset provision sidesteps the congressional rule that tax cuts, unaccompanied by spending cuts, can not exceed a $1.35 trillion 11 year limit. In public policy, a sunset provision or sunset clause is a provision in a statute or regulation that terminates or repeals all or portions of the law after a specific date, unless further legislative action is taken to extend it. ...
January 1 is the first day of the calendar year in both the Julian and Gregorian calendars. ...
2011 is a common year starting on Saturday of the Gregorian calendar. ...
One of the more interesting aspects of this provision is that the estate tax would be repealed in 2010 but would reappear in 2011. Only people who die in 2010 could pass on their fortunes with no estate tax, though heirs would face an expanded capital gains tax starting that year. Those with estates worth up to $3.5 million would escape taxes by dying in 2009, when that much inheritance would be exempt from estate taxes and heirs would not yet be hit by the new capital gains tax. 2010 is a common year starting on Friday of the Gregorian calendar. ...
2009 by topic 2009 is a common year starting on Thursday of the Gregorian calendar. ...
Effects of the Alternative Minimum Tax EGTRRA and the 2003 act significantly nominally lowered the marginal tax rates for nearly all US taxpayers. However by doing this it brought to prominence a previously lesser known provision of the US Internal Revenue Code, the Alternative Minimum Tax (AMT). The AMT was originally designed as a way of making sure that wealthy taxpayers could not take advantage of "too many" tax incentives and reduce their tax obligation by too much. It is an alternate system of calculating a taxpayer's tax liability that removes many so called "tax preference items". However the applicable AMT rates were not adjusted in step with the lowered rates of EGTRRA and the 2003 act, causing many more people to face higher taxes because of the AMT than had originally been planned. This reduced some of the benefit of EGTRRA and the 2003 act for many middle income earners. The Internal Revenue Service (IRS) is the United States government agency that collects taxes and enforces the tax laws. ...
The Alternative Minimum Tax (AMT) system exists as a parallel income tax system in the United States. ...
Major tax areas affected
Income tax EGTRRA generally reduced rates and steepened the progressivity of individual income taxes: A progressive tax, or graduated tax, is a tax that is larger as a percentage of income for those with larger incomes. ...
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- a new 10% bracket was created for single filers with income up to $6,000, joint filers up to $12,000, and heads of households up to $10,000.
- the 15% bracket's lower threshold was indexed to the new 10% bracket
- the 28% bracket would be lowered to 25% by 2006.
- the 31% bracket would be lowered to 28% by 2006
- the 36% bracket would be lowered to 33% by 2006
- the 39.6% bracket would be lowered to 35% by 2006
EGTRRA substantially reduced the so-called "marriage penalty," by increasing the standard deduction for joint filers to between 174% and 200% of the deduction for single filers.
Additionally, it changed the rate of tax on dividend income starting in 2003 to 5% for those in the 0% or 15% brackets, falling to 0% in 2008. It was lowered to 15% for all other brackets. A dividend is the distribution of profits to a companys shareholders. ...
Additionally, EGTRRA increased the per-child tax credit and the amount eligible for credit spent on dependent child care, phased out limits on itemized deductions and personal exemptions for higher income taxpayers, and increased the exemption for the Alternative Minimum Tax, and created a new depreciation deduction for qualified property owners.
See Effective Federal Tax Rates Under Current Law, 2001 to 2014, by the Congressional Budget Office. The Congressional Budget Office is a federal agency within the legislative branch of the United States government. ...
Capital gains tax Effective May 6, 2003, the capital gains tax was reduced to 5% for taxpayers in the 0% or 15% brackets, and to 0% in 2008. For other taxpayers, it was lowered to 15% for other taxpayers (10% for joint, and 20% for head of household). May 6 is the 125126th day of the year in the Gregorian Calendar (127th in leap years). ...
2003(MMIII) is a common year starting on Wednesday of the Gregorian calendar. ...
In many jurisdictions, including the United States and the United Kingdom, a capital gains tax or CGT is charged on capital gains, that is the profit realised on the sale of an asset that was previously purchased at a lower price. ...
Leap year starting on Tuesday // Predicted events January-June January 15 - NASAs MESSENGER spacecraft makes the first of three flybys of Mercury. ...
Qualified and retirement plans EGTRRA introduced sweeping changes to retirement plans, incorporating many of the so-called Portman-Cardin provisions proposed by those House members in 2000 and earlier in 2001. Overall it raised pre-tax contribution limits for defined contribution plans and Individual Retirement Accounts (IRAs), increased defined benefit compensation limits, made non-qualified retirement plans more flexible and more similar to qualified plans such as 401(k)s, and created a "catch-up" provision for older workers. A retirement plan is an arrangement to provide people with an income, or pension, during retirement, when they are no longer earning a steady income from employment. ...
Rob Portman speaks on March 17, 2005 at the White House ceremony at which President George W. Bush nominated him to be the next U.S. Trade Representative. ...
Ben Cardin Benjamin Louis Cardin (born October 5, 1943) is a Democratic member of the United States House of Representatives, representing the 3rd district of the State of Maryland (map) since 1987. ...
Seal of the House of Representatives The United States House of Representatives is one of the two houses of the Congress of the United States, the other being the Senate. ...
This article is about the year 2000. ...
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An Individual Retirement Account or IRA is a retirement plan account that provides some tax advantages for saving for retirement in the United States. ...
The following, taken from http://www. ...
The 401(k) plan is a type of retirement plan available in the United States. ...
EGTRRA allows, for the first time, for participants in non-qualified 401(a) money purchase, 403(b) tax-sheltered annuity, and governmental 457(b) deferred compensation plans (but not tax-exempt 457 plans) to "rollover" their money and consolidate accounts, whether to a different non-qualified plan, to a qualified plan such as a 401(k), or to an IRA. A 403(b) plan is a tax advantaged retirement savings plan available for non-profit employers in the United States. ...
The 457 plan is a type of tax advantaged defined contribution retirement plan that is available for governmental and certain non governmental employers in the United States. ...
The so-called "catch-up" provision allows employees over the age of 50 to make additional contributions to their retirement plans over and above the normal limits. For workers who are already retired, the law raises the age for minimum required distributions (MRDs), directing the Treasury to revise its life expectancy tables and simplify MRD rules. The United States Department of the Treasury is a Cabinet department, a treasury, of the United States government established by an Act of U.S. Congress in 1789 to manage the revenue of the United States government. ...
Life expectancy is the most likely number of years remaining for a living being (or the average for a class of living beings) of a given age to live. ...
EGTRRA created two new retirement savings vehicles. The Deemed IRA or Sidecar IRA is a Roth IRA attached as a separate account to an employer-sponsored retirement plan; while the differing tax treatment is preserved for the employee, the funds may be commingled for investment purposes. It is an improvement upon the unpopular qualified voluntary employee contribution (QVEC) provision developed in the early 1980s. The so-called Roth 401(k)/403(b) is a new tax-qualified employer-sponsored retirement plan to become effective in 2006, and would offer tax treatment in a retirement plan similar to thxyzat offered to account holders of Roth IRAs. A Roth IRA is an individual retirement account (IRA) in the United States. ...
// Events and trends The 1980s marked an abrupt shift towards more conservative lifestyles after the momentous cultural revolutions which took place in the 1960s and 1970s and the definition of the AIDS virus in 1981. ...
2006 is a common year starting on Sunday of the Gregorian calendar. ...
For plan sponsors, the law requires involuntary cash-out distributions of 401(k) accounts into a default IRA. It accelerates the mandatory vesting schedule applied to matching contributions, but increases the portion of employer contributions permitted from profit sharing. Small employers are granted tax incentives to offer retirement plans to their employees, and sole proprietors, partners and S corporation shareholders gain the right to take loans from their company pension plans.
Educational savings incentives
Estate and gift tax rules
External links
| Tax Acts of the United States | | 1861 | 1862 | 1894 | 1913 | 1916 | 1917 | 1918 | 1921 | 1924 | 1926 | 1928 | 1932 | 1940 | 1940 | 1941 | 1942 | 1943 | 1943 | 1944 | 1945 | 1948 | 1950 | 1950 | 1951 | 1954 | 1954 | 1962 | 1964 | 1968 | 1969 | 1971 | 1975 | 1976 | 1977 | 1978 | 1981 | 1982 | 1986 | 1990 | 1993 | 1997 | 2001 | 2002 | 2003 | This article needs to be wikified. ...
The Revenue Act of 1861 proposed that there shall be levied, collected, and paid, upon annual income of every person residing in the U.S. whether derived from any kind of property, or from any professional trade, employment, or vocation carried on in the United States or elsewhere, or from...
The Revenue Act of 1862 was passed by the United States Congress during the Civil War. ...
The Wilson-Gorman tariff of 1894 slightly reduced the U.S. tariff rates from the numbers set in the 1890 McKinley tariff. ...
Revenue Act of 1913 - Wikipedia /**/ @import /skins/monobook/IE50Fixes. ...
The United States Revenue Act of 1916 raised the lowest income tax rate from 1 percent to 2 percent and raised the top rate to 15 percent on taxpayers with incomes above $2 million. ...
The United States War Revenue Act of 1917 greatly increased federal income tax rates while simultaneously lowering exemptions. ...
The Revenue Act of 1918 raised income tax rates once again. ...
The United States Revenue Act of 1921 was the first Republican stab at tax reduction following their landslide victory in the 1920 federal elections. ...
The United States Revenue Act of 1924 cut federal tax rates and established the U.S. Board of Tax Appeals, which was later renamed the Tax Court of the United States in 1942. ...
The United States Revenue Act of 1926 reduced inheritance and personal income taxes, cancelled many excise imposts, and ended public access to federal income tax returns. ...
The Revenue Act of 1932 raised United States tax rates across the board, with the rate on top incomes rising from 25 percent to 63 percent. ...
The Revenue Act of 1940 temporarily and permanently increased individual income tax rates, temporarily and permanently increased corporate tax rates (top rate rose from 19% to 22. ...
The United States Second Revenue Act of 1940 created a corporate excess profits tax (top rate 50%) and increased corporate tax rates (top rate from 22. ...
The Revenue Act of 1941 permanently extended the temporary individual, corporate, and excise tax increases of 1940, increased the excess profits tax by 10 percentage points (top rate rose from 50 to 60 percent), and increased corporate tax rates 6-7 percentage points (top rate increased from 24 percent to...
The United States Revenue Act of 1942 increased individual income tax rates, increased corporate tax rates (top rate rose from 31 percent to 40 percent), and reduced the personal exemption amount from $1,500 to $1,200 (married couples). ...
The United States Revenue Act of 1943 increased federal excise taxes on, among other things, alcohol, jewelry, telephones, and admissions, and raised the excess profits tax rate from 90 percent to 95 percent. ...
The Current Tax Payment Act of 1943 introduced the concept of income tax withholding in the United States. ...
The Individual Income Tax Act of 1944 raised individual income tax rates in the United States and repealed the 3 percent Victory Tax. ...
The United States Revenue Act of 1945 repealed the excess profits tax, reduced individual income tax rates (the top rate fell from 94 percent to 86. ...
The United States Revenue Act of 1948 reduced individual income tax rates 5-13 percent, increased the personal exemption amount from $500 to $600, permitted married couples to split their incomes for tax purposes, and provided additional exemption for taxpayers age 65 and older. ...
The United States Revenue Act of 1950 eliminated a portion of the individual income tax rate reductions from the 1945 and 1948 tax acts, and increased the top corporate rate from 38 percent to 45 percent. ...
The United States Excess Profits Tax of 1950 created a temporary excess profits tax of 30 percent up through June 30, 1953. ...
The United States Revenue Act of 1951 temporarily increased individual income tax rates through 1953, and temporarily raised corporate tax rates 5 percentage points through March 31, 1954. ...
The United States Excise Tax Reduction Act of 1954 actually temporarily extended the 1951 excise tax increases (through March 31, 1955), but also reduced excise tax rates on, among other things, telephones, admissions, and jewelry. ...
The United States Internal Revenue Code of 1954 temporarily extended the 5 percentage point increase in corporate tax rates through March 31, 1955, increased depreciation deductions by providing additional depreciation schedules, and created a 4 percent dividend tax credit for individuals. ...
The United States Revenue Act of 1962 established a 7 percent investment tax credit and required information reporting to the government for interest and dividend payments. ...
The United States Revenue Act of 1964 reduced individual income tax rates (the top rate fell from 91 percent to 70 percent), and reduced the top corporate rate from 52 percent to 48 percent. ...
The United States Revenue and Expenditure Control Act of 1968 created a temporary 10 percent income tax surcharge on both individuals and corporations through June 30, 1969. ...
The United States Tax Reform Act of 1969 established individual and corporate minimum taxes, established a new tax schedule for single taxpayers, and lowered the maximum rate on earned income from 70 percent to 50 percent. ...
The United States Revenue Act of 1971 reinstated the investment tax credit, repealed the 7 percent automobile excise tax, and increased the minimum standard deduction from $1,000 to $1,300. ...
The United States Tax Reduction Act of 1975 provided a 10 percent rebate on 1974 tax liability ($200 cap) and created a temporary $30 general tax credit for each taxpayer and dependent. ...
The Tax Reform Act of 1976 was passed by the United States Congress in September of 1976, and signed into law by President Gerald Ford on October 4, 1976, becoming public law 94-455. ...
The Tax Reduction and Simplification Act of 1977 was passed by the 95th United States Congress and signed into law by President James Carter on May 23, 1977. ...
The United States Revenue Act of 1978 reduced individual income taxes (widened tax brackets and reduced the number of tax rates), increased the personal exemption from $750 to $1,000, reduced corporate tax rates (the top rate falling from 48 percent to 46 percent), increased the standard deduction from $3...
The Kemp-Roth Tax Cut (officially the Economic Recovery Tax Act, or ERTA) of 1981 reduced marginal income tax rates in the United States by approximately 25% over three years (the top rate falling to 50% from 70% while the bottom rate dropped to 11% from 14%) and indexed them...
The United States Tax Equity and Fiscal Responsibility Act of 1982 rescinded some of the effects of the huge Kemp-Roth Tax Cut passed the year before. ...
President Ronald Reagan signs the Tax Reform Act of 1986 on the South Lawn. ...
The Omnibus Budget Reconciliation Act of 1990 (or OBRA-90) was designed to reduce the United States federal budget deficit. ...
The Omnibus Budget Reconciliation Act of 1993 (or OBRA-93) was passed by the 103rd United States Congress and signed into law by President Bill Clinton. ...
The Taxpayer Relief Act of 1997 reduced several federal taxes in the United States. ...
The Job Creation and Worker Assistance Act of 2002 increased carryback of net operating losses to 5 years (through September 2003), extended the exception under Subpart F for active financing income (through 2006), and created 30 percent expensing for certain capital asset purchases (through September 2004). ...
The Jobs and Growth Tax Relief Reconciliation Act of 2003 was passed by the United States Congress on May 23, 2003 and signed by President Bush five days later. ...
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