Acceleration of the individual rate reductions that were being phased in under the 2001 Tax Act.
	Reduction in tax rates on long-term capital gains and dividends.
	Increasing the AMT exemption amount.
	Aid for small businesses by providing incentives to purchase new equipment.

Single Return Rate Schedule
Taxable income levels	Tax rate
0 to $7000	10%
$7,001 to $28,400	15%
$28,401 to $68,800	25%
$68,801 to 143,500	28%
$143,501 to $311,950	33%
Over $311,950	35%

Married Filing Jointly Rate Schedule
Taxable income levels	Tax rate
0 to $14,000	10%
$14,001 to $56,800	15%
$56,801 to $114,650	25%
$114,651 to $174,700	28%
$174,701 to $311,950	33%
Over 311,950	35%

You should note that under the 2001 Tax Act, the top rate for 2003 would have been 38.6%.

Long-term Capital Gains and Dividends
The legislation reduced the tax rate on long-term capital gains (investments held for more than a year) to a maximum of 15%. This applies to gains realized after 5/5/03 and is scheduled to be in effect for all tax years through 2008. The rate on gains for taxpayers in the 10% and 15% brackets will be 5%.

One of the more visible parts of the tax debate was the discussion of how dividends should be taxed. Historically, dividends were taxed like all other sources of income (wages and interest) and subject to the normal tax rates. After much debate, the 2003 Tax Act reduced the maximum tax rates on qualifying dividends to 15% just like the tax rate on long-term capital gains.

This tax rate for dividends applies to most dividends from investments, but does not cover receipts that are "interest" in nature like those from money market funds and fixed income mutual funds. It also does not apply to distributions from real estate investment trusts.

AMT Exemption
The Alternative Minimum Tax (AMT) was originally enacted to ensure that high income individuals could not use various strategies to avoid paying taxes. The number of taxpayers subject to the AMT has grown to over 2.5 million because of the way the AMT is calculated. The 2001 Tax Act made some minor adjustments to the "AMT exemption" amounts to try to make the AMT less burdensome to "normal" taxpayers that found themselves subject to the tax.

This was accomplished by increasing the AMT exemption for joint return filers from $49,000 to $58,000 and for single filers from $37,750 to $40,240. This will provide some relief, but if you have relatively large amounts of itemized deductions, a large number of personal exemptions or have certain "tax preference" items of significant size, you should consult your tax advisor to better understand the AMT.

Aid for Small Businesses
The 2003 Tax Act has a couple of provisions that were designed to help small businesses and to stimulate the purchase of new equipment by those businesses. In most cases, a business "writes off" the cost of equipment over a period of years through a depreciation allowance. That allowance is based on the type of equipment and the expected useful life of the equipment.

The new law changes the way depreciation is calculated so that a business can claim larger amounts of depreciation (reducing taxable income) in the year the equipment is purchased. In addition, the 2001 Tax Act now allows businesses to immediately "write-off" up to $100,000 of qualifying property placed in service during the year. This is up from $25,000.

These small business provisions contain some limitations and are currently scheduled to be effective for a couple of years.

Summary
In total, the 2003 Tax Act provides significant reductions in taxes through lower rates on normal income and special lower rates on dividends and long-term capital gains. Since the new rates are effective retroactive to 1/1/03 and the lower rates on long-term capital gains are effective retroactive to 5/6/03, there is little for most taxpayers to do except enjoy the benefits.