On May 23, 2003, President George W. Bush signed the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). This Act, among other things, reduced the amount of federal taxes paid by individuals and activities that contributed to economic growth.
Tax Relief for Individuals
The JGTRRA introduced a number of tax relief measures for individuals. These included a reduction in the tax rate for those in the highest income brackets, as well as additional child tax credits for lower and middle-income families.
In addition, the Act established a temporary 10% tax bracket for the lowest income households, lowering taxes for those making less than $25,000 per year. Lastly, the Act increased the amount of dividends and capital gains eligible for tax reduction from 18% to 15%.
Tax Benefits for Job Creation and Investment
The JGTRRA provided several tax incentives that encouraged businesses to create jobs. The most notable was a reduction in the rate for the corporate income tax, taking the top rate from 35% down to 32%.
The Act also included various measures designed to incentive investments. For businesses, this included increasing the amount they could depreciate for taxes and allowing them to deduct certain expenses related to technology development. For families, this included the introduction of a tax-free savings account of up to $4,000 a year.
The Impact of the JGTRRA
The JGTRRA has had a significant impact on the U.S. economy in the years since its passage. Since 2003, the unemployment rate has been cut in half, from 6.3% to 3.2%. The rate of economic growth has increased significantly, with real GDP growth reaching 4.2% in 2018.
The tax relief provided by the JGTRRA has been credited with helping to create and sustain strong economic growth in the United States, as well as providing needed tax relief for individuals and families.