On May 28th, President Bush signed into law the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). Below are the highlights of the reduced tax rates for individual income tax rates:

• 10% Tax Bracket pertains to those individuals who are either Single, Married filing separately and earning less than $7000; Head of House filers earning less than $10,000; Married filing jointly earning less than $14,000.
• 15% Tax Bracket pertains for those Single and Married filing separately and earning less than $28,400; Head of house filers earning less than $38,500 and for those married filing jointly earnings must be less than $56,800.
• 25% Tax Bracket pertains for those Single taxpayers earning less than $68,800; Married filing separate taxpayers earning less than $57,325; Head of House filers earning less than $98,250 and for those married taxpayers filing jointly earning must be no greater than $114,650.
• 28% Tax Bracket pertains for those Single taxpayers earning less than $143,500; Married filing separate taxpayers earning less than $87,350; Head of House filers earning less than $159,100 and for those taxpayers filing married filing jointly earning must be no greater than $174,700.
• 33% Tax Bracket pertains for those Single, Head of House and Married Filing Jointly taxpayers earning less than $311,950; Married Filing Separate taxpayers earning less than $155,975.
• 35% Tax Bracket pertains to those Single, Head of House and Married Filing Jointly taxpayers earning more than $311,950; Married Filing Separate taxpayers earning more than $155,975.

The maximum tax rates on combined capital gains (net long term gain reduced by any short term capital loss) have been reduced to 15% form a previous 20% for the prior year. For those taxpayers in the 10 and 15 percent tax brackets the capital gain rate will be 5 percent. All rate changes become effective after May 5, 2003. Thus, any long term capital gains occurring between January 1 st and May 5, 2003 will be taxed at the old, 20 and 10 percent, respective capital gain rates.

Dividend income will enjoy capital gain rates, maximum of 15 percent. Those taxpayers in the 10 and 15 percent tax brackets will see their maximum dividend rate at 5 percent.  For the purpose of capital gain dividends are classified as income received from an U.S. or qualified foreign corporation. Dividends received from the a credit union or other shareholder account, i.e. saving, checking, etc., is not considered dividends for the purpose of applying the 5 and 15 percent capital gain rates. Dividends received from an institutions shareholder account will be taxed at the taxpayers individual tax rate up to a maximum of 35 percent.