A provision that reduces tax rates on dividend income calculated at the shareholder level provides a new incentive for corporations to purchase Low Income Housing Tax Credits.
From the outset, the nation’s home builders worked closely with the Administration and congressional leaders on both sides of the aisle to develop an economic stimulus plan that is good for all segments of the housing industry and the entire economy.
During deliberations over the past few months, NAHB was the only housing organization that had a seat at the table with these key policymakers.
Following are highlights of the tax bill:
Income Taxes
- Moves up to this year across-the-board tax rate reductions that had been scheduled to occur in 2004 and 2006; all rate reductions sunset in 2010, reverting to the rates that were in effect before 2001.
- Increases the child credit from $600 to $1,000 in 2003 and 2004.
- Expands the 10% bracket in 2003 and 2004.
- Eliminates the “marriage penalty” in 2003 and 2004.
- Increases the alternative minimum tax exemption in 2003 and 2004 to $58,000 for married couples and $40,250 for unmarried taxpayers.
Depreciation and Expensing
- Increases small business expensing from $25,000 to $100,000 and the phase-out threshold from $100,000 to $400,000 through 2005.
- Raises the bonus depreciation for business equipment from 30% to 50% through 2004.
Dividends and Capital Gains
- Institutes new 15% and 5% capital gains tax rates to replace the current 20% and 10% rates. The same rates apply to dividends and both are effective this year. The 15% rate sunsets after 2008. The 5% rate is reduced to zero in 2008 and then sunsets after 2008.
State Aid
- Allocates $10 billion for Medicaid assistance and $10 billion to state and local governments over two years.
For more information, e-mail Marty Morris or call him at 800-368-5242 x8470.
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