Marriage Tax Penalty Relief Provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001
Publication Date: January 2003
Publisher: Library of Congress. Congressional Research Service
Author(s):
Research Area: Banking and finance
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Abstract:
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) contains three marriage tax penalty relief provisions. It increases the standard deduction for joint returns to twice the size of the standard deduction for single returns. This change is phased in over a 5-year period starting in calendar year 2005. The 2001 Act also increases the width of the 15% marginal income tax bracket for joint returns to twice the width of the 15% tax bracket for single returns. This change is phased in over a 4-year period starting in calendar year 2005. Finally, the 2001 Act increases the earned income tax credit phaseout start and end points for joint returns by $3,000 with the increase phased in over a 7-year period starting in calendar year 2002. The Joint Committee on Taxation estimates that the combined cost of all of the marriage penalty relief provisions will be $63 billion over the fiscal year period 2002 through 2011.
All of the EGTRRA tax cuts, including the marriage tax relief provisions, are scheduled to expire at the end of calendar year 2010. In the 107th Congress, the House passed several bills that would have extended the EGTRRA tax cuts beyond 2010. The Senate, however, did not adopt these bills. It is likely that the 108th Congress will revisit the issue of making the EGTRRA tax cuts permanent.
Additionally, in response to continued sluggish economic performance, President Bush unveiled a new tax stimulus plan in early January 2003. As part of his stimulus plan, President Bush has proposed accelerating the phase-in of some of the EGTRRA tax cut provisions. The President's proposal includes accelerating the increase in the standard deduction for joint returns and the increase in the width of the 15% tax bracket for joint returns. The Treasury Department estimates that the 10-year revenue cost of these two changes would be $58 billion.
This report will be updated as legislation action warrants.