Tax-Cut Checklist

By Bernard Baumohl

BRACKETS

Income will be taxed at lower rates. The top 39.6% level will drop in stages to 35% by 2006. Several other rates will fall gradually as well: 36% to 33%, 31% to 28%, 28% to 25%. The 15% bracket remains unchanged, except that the first $6,000 in income for singles and $12,000 for couples will be taxed at a new 10% rate effective July 1.

ESTATE TAX

The so-called death tax will be repealed by 2010. For now, the top 55% rate falls to 50%; the current exemption on the first $675,000 will rise in steps to $3.5 million by 2009.

MARRIAGE PENALTY

Beginning in 2005, a married couple's standard deduction will be raised gradually until it equals twice that of a single taxpayer's; more of the couple's income will also fall into the 15% bracket.

CHILD CREDIT

The plan doubles the current $500 child credit by 2010. Low-income families who earn more than $10,000 and pay no taxes will now get part of the child credit as a cash payment.

REBATES

The check is in the mail. Taxpayers will get an instant refund by September, with amounts of up to $300 for an individual, $500 for a single parent and $600 for a married couple.

SCORECARD

Congress passed, and President Bush will sign, a 10-year, $1.35 trillion plan that offers savings to every taxpayer. This table shows the effect in 2010, when it is fully phased in.

INCOME $25,000 HOUSEHOLD single, no children CURRENT LAW $2,633 NEW TAX LAW $2,283 SAVINGS $350

[INCOME] $25,000 [HOUSEHOLD] married, 2 children [CURRENT LAW] $1,500 credit [NEW TAX LAW] $3,702 credit [SAVINGS] $2,202

[INCOME] $75,000 [HOUSEHOLD] single, no children [CURRENT LAW] $11,422 [NEW TAX LAW] $10,283 [SAVINGS] $1,139

[INCOME] $75,000 [HOUSEHOLD] married, 2 children [CURRENT LAW] $5,698 [NEW TAX LAW] $3,998 [SAVINGS] $1,700

[INCOME] $150,000 [HOUSEHOLD] single, no children [CURRENT LAW] $31,102 [NEW TAX LAW] $27,767 [SAVINGS] $3,336

[INCOME] $150,000 [HOUSEHOLD] married, 2 children [CURRENT LAW] $24,619 [NEW TAX LAW] $21,866 [SAVINGS] $2,753

[INCOME] $400,000 [HOUSEHOLD] single, no children [CURRENT LAW] $110,036 [NEW TAX LAW] $95,979 [SAVINGS] $14,056

[INCOME] $400,000 [HOUSEHOLD] married, 2 children [CURRENT LAW] $104,878 [NEW TAX LAW] $90,888 [SAVINGS] $13,989

[INCOME] $1,000,000 [HOUSEHOLD] married, 2 children [CURRENT LAW] $306,838 [NEW TAX LAW] $259,281 [SAVINGS] $47,557

Source: Deloitte & Touche

--By Bernard Baumohl