NEWS

FROM THE COMMITTEE ON WAYS AND MEANS

FOR IMMEDIATE RELEASE
Contact: Mark Gundersen (202) 225-8933
Friday, May 25, 2001 

Congress Approves Historic Tax Relief Plan

Chairman Thomas: "The President Promised Substantial Tax Relief - Congress Delivered"

WASHINGTON, DC - Ways and Means Chairman Bill Thomas (R-CA) praised today's tax relief agreement between the House and Senate.

"The President promised substantial tax relief for every American and today Congress delivered. This historic vote will put money back into the taxpayers' pockets and provide a considerable boost to our economy.

I applaud the work and leadership my colleagues in the House and the Senate displayed as we secured an agreement on this broad-based bipartisan package. This is a great day for the American taxpayer and working families," said Chairman Thomas.

The major components of the conference agreement follow:

Marginal Rate Reductions (Similar to H.R. 3)

· Lowers the top tax rate from 39.6 percent to 35 percent, and lowers other tax rates to create a new rate structure: 10 percent, 15 percent, 25 percent, 28 percent 33 percent, and 35 percent.

· Creates new 10 percent rate effective January 1, 2001, on first $6,000 (singles), on first $10,000 (single parents), and first $12,000 (couples).

· For 2001, the benefit of the new 10 percent bracket is provided this year through a lump-sum refund of $300 for single taxpayers, $500 for single parents, and $600 for married taxpayers.

· Repeals personal exemption (PEP) and itemized deductions (Pease) phase-outs beginning in 2006.

Marriage Penalty Repeal (Similar to H.R. 6)

· 15 percent bracket adjusted to twice that of singles.

· Standard deduction for married couples will be twice that of singles is phased-in over five years beginning in 2005.

Child Tax Credit Expansion (Similar to H.R. 6)

· Doubles the child credit from $500 to $1,000.

· Increases child credit to $600 (2001-2004), $700 (2005-2008), $800 (2009), $1,000 (2010), and makes refundable in part.

Estate/Death Tax Repeal (Similar to H.R. 8)

· Repeals the death tax in 2010.

· Phases in increase in the unified credit -- $1 million (2002-2003), $1.5 million (2004-2005), $2 million (2006-2008), $3.5 million (2009).

· Expands the availability of the current law estate tax exclusion for conservation easements.

Pension and Retirement Savings (Similar to H.R. 10)

· Increases IRA contributions from $2,000 to $5,000.

· Increases 401(k) and other tax-deferred contribution limits from $10,500 to $15,000.

· Deletes tax-free IRA withdrawals for charitable purposes.

· "Catch-up" contributions for people age 50 and above.

· Provides over 50 other improvements.

Education Incentives

· Increases education savings accounts (ESAs) from $500 to $2,000 and expands to K-12 public and private education.

· Above-the-line deduction for qualified higher education expenses.

· Allows tax-free distributions from Qualified Tuition Plans and permits private institutions to offer such plans.

· Makes permanent employer-provided educational assistance exclusion and extends the benefit of the exclusion to graduate level courses.

Adoption Tax Credit (Similar to H.R. 622)

· Increases the credit to $10,000 for special needs (currently $6,000) and non-special needs children (currently $5,000).

· Increases the income phase-out range from current $75,000 to $150,000.

Alternative Minimum Tax Relief

· Temporary increase in exemption amount by $2,000 for single individuals and $4,000 for couples.