Jobs and Growth Tax Relief Reconciliation Act of 2003

From the Kentucky Thoroughbred Association

Before adjourning for the Memorial Day recess, the United States Congress passed the Jobs and Growth Tax Relief Reconciliation Act of 2003. President George Bush will sign this legislation, which includes a number of provisions that will benefit the horse industry.

The $350 billion tax cut bill will:
Accelerate the scheduled reductions in the regular income tax rates above 15% so that they are effective for 2003 and thereafter. The tax rates in excess of 15% will be 25%, 28%, 33%, and 35%. The rate reduction is effective for taxable years beginning after December 31, 2002. However, the lower rates still are scheduled to go back up to pre-2001 levels in 2011, unless Congress acts in the future to make the reductions permanent.

Increase the alternative minimum tax exemption amount for married taxpayers filing a joint return and surviving spouses to $58,000, and for unmarried taxpayers to $40,250 for taxable years beginning in 2003 and 2004. The provision is effective for taxable years beginning after December 31, 2002, and before January 1, 2005.

Increase the additional first-year "bonus" depreciation deduction from 30% to 50% for capital assets, including horses and other assets used in the horse business. In general, in order to qualify for the 50% additional depreciation deduction, the "original use" of the property must be by the taxpayer and the property must be acquired after May 5, 2003, and before January 1, 2005.

Increase the Section 179 expensing deduction from $25,000 to $100,000 for property placed in service in taxable years beginning in 2003, 2004, and 2005. This includes horses and other assets used in the horse business. In addition, for purposes of the phase-out of the deductible amount, the present $200,000 threshold is increased to $400,000.

Reduce individual capital gains tax rates to 5% (zero, in 2008) for taxpayers in the lowest bracket and to 15% for all others. The provision applies to sales and exchanges made on or after May 6, 2003 and before January 1, 2009.

Reduce the tax on dividends received by an individual to 5% (zero, in 2008) for taxpayers in the lowest bracket and to 15% for all others. The reduction applies to dividends received in taxable years beginning after 2002 and before 2009.

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