The bulk of the tax legislation ($875 billion) is phased-in during the years 2006 to 2010 through a complicated array of unprecedented back-loaded benefits. In addition, the Act provides that all of the tax cuts, both the income tax changes and the repeal of the estate tax, sunset (that is, the tax cuts themselves will be repealed) on December 31, 2010. Thus, all of these new provisions are technically only temporary, and will expire unless Congress reenacts them.
The other individual income tax rates will gradually be reduced, beginning with a one-percentage point reduction in all current tax rates effective July 1, 2001.
Year Rates
2000 28% 31% 36% 39.6%
2001* 27.5% 30.5% 35.5% 39.1%
2002-2003 27% 30% 35% 38.6%
Contrary to popular opinion, the Act does not permanently repeal the estate tax. Rather, the Act repeals the estate tax for only one year- 2010. The Act allows the current estate tax rules, rates and exemptions to come back into force in 2011.
Thus, under the Act, the estate tax continues - albeit with an increasing exemption from $1 million to $3.5 million through 2009 - until 2010 when it is repealed only for that year.
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* blended tax rate |
