Reduced Tax Rates

What is it?
Tax rates calculate the amount of taxes owed based on your taxable income and filing status.

What's changing?
The tax cut creates a new tax rate (10%) that applies to every taxpayer, and because it's retroactive to Jan. 1, 2001, you'll get relief right away. The plan also gradually decreases the 28%, 31%, 36%, and 39.6% tax rate brackets to 25%, 28%, 33%, and 35% respectively. The rate reductions would occur in four steps occurring in 2001, 2004, and 2006.

What does it mean to me?
Most taxpayers will see immediate savings. Depending on your income and filing status, single taxpayers will get a $300 lump sum refund, single parents will get $500, and married couples will get $600. That money will come to you in the form of a rebate check. The first checks may go out as soon as July 20.

Specifically, if you're single and your taxable income is $6,000 and above, the new tax rate will translate into a $300 savings. If you're married and filing jointly with a taxable income of $12,000 and above, you'll see $600 in savings. Taxpayers with a taxable income of less than $6,000 for singles, or $12,000 for married filing jointly, will see a lower benefit.

The Details ...
The 2001 Act provides for a retroactive implementation of a 10% rate bracket to January 1, 2001, which will benefit all taxpayers with a tax liability. The taxable income at which the 10% bracket ends ($6,000 for single taxpayer, $12,000 for married taxpayers filing jointly, $10,000 for heads of household) is adjusted for years 2007-2010 to $7,000, $10,000, and $14,000 respectively.

The 2001 Act phases in the reduced tax rates over six years. The reduction of the 28% and higher brackets begins July 1, 2001 and is not completed until 2006.

2001 Tax Rates
Single	Married Joint	Head of Household	Tax Rate
$ 1 - $ 27,050	$1-$45,200	$ 1 - $ 36,250	15%
$ 27,051-$ 65,550	$ 45,201- $109,250	$ 36,251 - $ 93,650	27.5%
$ 65,551 - $ 136,750	$ 109,251 - $166,500	$ 93,651 - $ 151,650	30.5%
$ 136,750 - $ 297,350	$ 166,501- $297,350	$ 151,651 - $ 297,350	35.5%
$ 297,350 - Up	$ 297,350 - Up	$ 297,350 - Up	39.1%
*27%, 30%, 35%38.6%rates become effective July 1, 2001

Reduced Tax Rates Timeline
Tax Rate	*2001-2003**	2004-2005	2006-2010
10%	10%	10%	10%
15%	15%	15%	15%
28%	27%	26%	25%
31%	30%	29%	28%
36%	35%	34%	33%
39.6%	38.6%	37.6%	35%
*27%, 30%, 35%38.6%rates become effective July 1, 2001

Tax Savings
The chart below shows the reduction in taxes under the 2001 Act.

Benefit Compared to 2001 Rates
Single
Taxable Income	2002-03	2004-05	2006	2007-10	Total
$10,000	$300	$300	$300	$350	$3,200
$25,000	$300	$300	$300	$350	$3,200
$50,000	$530	$760	$989	$1,039	$8,139
$100,000	$1,030	$1,759	$2,489	$2,539	$18,884
$150,000	$1,529	$2,759	$3,989	$4,039	$29,636
$200,000	$2,029	$3,760	$5,489	$5,539	$40,386
$300,000	$3,030	$5,759	$8,531	$8,581	$62,097

*Dollar amounts represent each year's savings

Married Filing Jointly
Taxable Income	2002-03	2004-05	2006	2007-10	Total
$10,000	$500	$500	$500	$500	$5,000
$25,000	$600	$600	$600	$700	$6,400
$50,000	$648	$696	$744	$844	$7,432
$100,000	$1,148	$1,696	$2,244	$2,344	$18,182
$150,000	$1,648	$2,697	$3,744	$3,844	$28,934
$200,000	$2,148	$3,697	$5,245	$5,345	$39,684
$300,000	$3,148	$5,696	$8,287	$8,387	$61,395

*Dollar amounts represent each year's savings

Head of Household
Taxable Income	2002-03	2004-05	2006	2007-10	Total
$10,000	$500	$500	$500	$500	$5,000
$25,000	$500	$500	$500	$500	$5,000
$50,000	$638	$776	$913	$913	$7,961
$100,000	$1,138	$1,775	$2,413	$2,413	$18,706
$150,000	$1,638	$2,775	$3,912	$3,912	$29,456
$200,000	$2,137	$3,776	$5,413	$5,413	$40,208
$300,000	$3,138	$5,775	$8,455	$8,455	$61,919