FAQs: Taxes

Tax Relief

IMPORTANT MESSAGE: We have compiled the list of questions below based on inquiries that we receive. This information is generic in nature regarding tax policy questions and is NOT intended to serve as tax advice. We also cannot provide up-to-date information on any Administration or Congressional proposals that may affect the information shown herein. Any questions regarding specific tax situations or for help in filling out your tax return should be directed to your attorney, accountant or other tax professional, or to the Internal Revenue Service. The IRS will not comment, though, on the legislative merits of current tax law, or on pending Congressional action that may change the tax code. Finally, we make every effort to make certain that the information contained here is accurate, but due to the fluid nature of the legislative process, changes in tax laws may occur that are not reflected here at the time of publication. To the best of our knowledge, this information is accurate.

Who benefits from the President's tax relief package enacted last summer?

How would small businesses benefit from the tax relief passed last summer?

What will happen if we don't make the tax relief passed last summer permanent?

Who benefits from the President's tax relief package enacted last summer?

When the major individual income tax provisions are fully phased in:

• 104 million individuals and families will receive an average tax cut of $1,040.
• Nearly 43 million married couples will receive an average income tax cut of about $1,720.
• Over 38 million filers with children will receive an average income tax cut of $1,460.
• Over 10 million single mothers with children will be able to keep, on average, $770 more of their income.
• About 13 million seniors will see their taxes reduced, on average, by $915.

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How would small businesses benefit from the tax relief passed last summer?

The tax cut will help small business: the 33 million business owners who are taxed on their business income at individual rates stand to benefit from the Bush tax cut.

These business owners will receive over 80 percent of the tax relief associated with the reductions in the top two rates, providing incentives for expanding their businesses and creating new jobs.

Small businesses (including small businesses taxed as corporations):

• Provide about 75 percent of the net new jobs
• Represent more than 99 percent of all employers
• Generate more than 50 percent of America's private sector output

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What will happen if we don't make the tax relief passed last summer permanent?

If we don't make the tax relief permanent, taxes will be raised on millions of hardworking Americans and their families. In the 2003 budget, President Bush proposed making the tax relief plan permanent. If we don't repeal the sunset, among the many tax increases that will occur in 2011 are the following:

• The tax rate on low income families will jump 50% (from 10% to 15%)
• The child credit will fall by 50%
• Marriage penalties will be restored
• Formerly tax-free withdrawals for certain education savings plans will become taxable
• IRA contribution limits will shrink by more than 60%
• The death tax will be restored

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