-CITE-
26 USC PART I - TAX ON INDIVIDUALS 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART I - TAX ON INDIVIDUALS
-HEAD-
PART I - TAX ON INDIVIDUALS
-MISC1-
Sec.
1. Tax imposed.
2. Definitions and special rules.
3. Tax tables for individuals having taxable income of
less than $20,000.(!1)
[4. Repealed.]
5. Cross references relating to tax on individuals.
AMENDMENTS
1976 - Pub. L. 94-455, title V, Sec. 501(c)(1), Oct. 4, 1976, 90
Stat. 1559, substituted "Tax tables for individuals having taxable
income of less than $20,000" for "Optional tax tables for
individuals" in item 3 and struck out item 4 relating to rules for
optional tax.
1969 - Pub. L. 91-172, title VIII, Sec. 803(d)(9), Dec. 30, 1969,
83 Stat. 685, substituted "Definitions and special rules" and
"Optional tax tables for individuals" for "Tax in case of joint
return or return of surviving spouse" and "Optional tax if adjusted
gross income is less than $5,000" in items 2 and 3, respectively.
-FOOTNOTE-
(!1) Section catchline amended by Pub. L. 95-30 without
corresponding amendment of analysis.
-End-
-CITE-
26 USC Sec. 1 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART I - TAX ON INDIVIDUALS
-HEAD-
Sec. 1. Tax imposed
-STATUTE-
(a) Married individuals filing joint returns and surviving spouses
There is hereby imposed on the taxable income of -
(1) every married individual (as defined in section 7703) who
makes a single return jointly with his spouse under section 6013,
and
(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table:
If taxable income is: The tax is:
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Not over $36,900 15% of taxable income.
Over $36,900 but not over $5,535, plus 28% of the excess over
$89,150 $36,900.
Over $89,150 but not over $20,165, plus 31% of the excess
$140,000 over $89,150.
Over $140,000 but not $35,928.50, plus 36% of the excess
over $250,000 over $140,000.
Over $250,000 $75,528.50, plus 39.6% of the
excess over $250,000.
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(b) Heads of households
There is hereby imposed on the taxable income of every head of a
household (as defined in section 2(b)) a tax determined in
accordance with the following table:
If taxable income is: The tax is:
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Not over $29,600 15% of taxable income.
Over $29,600 but not over $4,440, plus 28% of the excess over
$76,400 $29,600.
Over $76,400 but not over $17,544, plus 31% of the excess
$127,500 over $76,400.
Over $127,500 but not $33,385, plus 36% of the excess
over $250,000 over $127,500.
Over $250,000 $77,485, plus 39.6% of the excess
over $250,000.
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(c) Unmarried individuals (other than surviving spouses and heads
of households)
There is hereby imposed on the taxable income of every individual
(other than a surviving spouse as defined in section 2(a) or the
head of a household as defined in section 2(b)) who is not a
married individual (as defined in section 7703) a tax determined in
accordance with the following table:
If taxable income is: The tax is:
--------------------------------------------------------------------
Not over $22,100 15% of taxable income.
Over $22,100 but not over $3,315, plus 28% of the excess over
$53,500 $22,100.
Over $53,500 but not over $12,107, plus 31% of the excess
$115,000 over $53,500.
Over $115,000 but not $31,172, plus 36% of the excess
over $250,000 over $115,000.
Over $250,000 $79,772, plus 39.6% of the excess
over $250,000.
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(d) Married individuals filing separate returns
There is hereby imposed on the taxable income of every married
individual (as defined in section 7703) who does not make a single
return jointly with his spouse under section 6013, a tax determined
in accordance with the following table:
If taxable income is: The tax is:
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Not over $18,450 15% of taxable income.
Over $18,450 but not over $2,767.50, plus 28% of the excess
$44,575 over $18,450.
Over $44,575 but not over $10,082.50, plus 31% of the excess
$70,000 over $44,575.
Over $70,000 but not over $17,964.25, plus 36% of the excess
$125,000 over $70,000.
Over $125,000 $37,764.25, plus 39.6% of the
excess over $125,000.
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(e) Estates and trusts
There is hereby imposed on the taxable income of -
(1) every estate, and
(2) every trust,
taxable under this subsection a tax determined in accordance with
the following table:
If taxable income is: The tax is:
--------------------------------------------------------------------
Not over $1,500 15% of taxable income.
Over $1,500 but not over $225, plus 28% of the excess over
$3,500 $1,500.
Over $3,500 but not over $785, plus 31% of the excess over
$5,500 $3,500.
Over $5,500 but not over $1,405, plus 36% of the excess over
$7,500 $5,500.
Over $7,500 $2,125, plus 39.6% of the excess
over $7,500.
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(f) Phaseout of marriage penalty in 15-percent bracket; adjustments
in tax tables so that inflation will not result in tax increases
(1) In general
Not later than December 15 of 1993, and each subsequent
calendar year, the Secretary shall prescribe tables which shall
apply in lieu of the tables contained in subsections (a), (b),
(c), (d), and (e) with respect to taxable years beginning in the
succeeding calendar year.
(2) Method of prescribing tables
The table which under paragraph (1) is to apply in lieu of the
table contained in subsection (a), (b), (c), (d), or (e), as the
case may be, with respect to taxable years beginning in any
calendar year shall be prescribed -
(A) except as provided in paragraph (8), by increasing the
minimum and maximum dollar amounts for each rate bracket for
which a tax is imposed under such table by the cost-of-living
adjustment for such calendar year,
(B) by not changing the rate applicable to any rate bracket
as adjusted under subparagraph (A), and
(C) by adjusting the amounts setting forth the tax to the
extent necessary to reflect the adjustments in the rate
brackets.
(3) Cost-of-living adjustment
For purposes of paragraph (2), the cost-of-living adjustment
for any calendar year is the percentage (if any) by which -
(A) the CPI for the preceding calendar year, exceeds
(B) the CPI for the calendar year 1992.
(4) CPI for any calendar year
For purposes of paragraph (3), the CPI for any calendar year is
the average of the Consumer Price Index as of the close of the
12-month period ending on August 31 of such calendar year.
(5) Consumer Price Index
For purposes of paragraph (4), the term "Consumer Price Index"
means the last Consumer Price Index for all-urban consumers
published by the Department of Labor. For purposes of the
preceding sentence, the revision of the Consumer Price Index
which is most consistent with the Consumer Price Index for
calendar year 1986 shall be used.
(6) Rounding
(A) In general
If any increase determined under paragraph (2)(A), section
63(c)(4), section 68(b)(2) or section 151(d)(4) is not a
multiple of $50, such increase shall be rounded to the next
lowest multiple of $50.
(B) Table for married individuals filing separately
In the case of a married individual filing a separate return,
subparagraph (A) (other than with respect to sections 63(c)(4)
and 151(d)(4)(A)) shall be applied by substituting "$25" for
"$50" each place it appears.
(7) Special rule for certain brackets
(A) Calendar year 1994
In prescribing the tables under paragraph (1) which apply
with respect to taxable years beginning in calendar year 1994,
the Secretary shall make no adjustment to the dollar amounts at
which the 36 percent rate bracket begins or at which the 39.6
percent rate begins under any table contained in subsection
(a), (b), (c), (d), or (e).
(B) Later calendar years
In prescribing tables under paragraph (1) which apply with
respect to taxable years beginning in a calendar year after
1994, the cost-of-living adjustment used in making adjustments
to the dollar amounts referred to in subparagraph (A) shall be
determined under paragraph (3) by substituting "1993" for
"1992".
(8) Phaseout of marriage penalty in 15-percent bracket
(A) In general
With respect to taxable years beginning after December 31,
2002, in prescribing the tables under paragraph (1) -
(i) the maximum taxable income in the 15-percent rate
bracket in the table contained in subsection (a) (and the
minimum taxable income in the next higher taxable income
bracket in such table) shall be the applicable percentage of
the maximum taxable income in the 15-percent rate bracket in
the table contained in subsection (c) (after any other
adjustment under this subsection), and
(ii) the comparable taxable income amounts in the table
contained in subsection (d) shall be 1/2 of the amounts
determined under clause (i).
(B) Applicable percentage
For purposes of subparagraph (A), the applicable percentage
shall be determined in accordance with the following table:
For taxable years beginning The applicable
in calendar year - percentage is -
2003 and 2004 200
2005 180
2006 187
2007 193
2008 and thereafter 200.
(C) Rounding
If any amount determined under subparagraph (A)(i) is not a
multiple of $50, such amount shall be rounded to the next
lowest multiple of $50.
(g) Certain unearned income of minor children taxed as if parent's
income
(1) In general
In the case of any child to whom this subsection applies, the
tax imposed by this section shall be equal to the greater of -
(A) the tax imposed by this section without regard to this
subsection, or
(B) the sum of -
(i) the tax which would be imposed by this section if the
taxable income of such child for the taxable year were
reduced by the net unearned income of such child, plus
(ii) such child's share of the allocable parental tax.
(2) Child to whom subsection applies
This subsection shall apply to any child for any taxable year
if -
(A) such child has not attained age 14 before the close of
the taxable year, and
(B) either parent of such child is alive at the close of the
taxable year.
(3) Allocable parental tax
For purposes of this subsection -
(A) In general
The term "allocable parental tax" means the excess of -
(i) the tax which would be imposed by this section on the
parent's taxable income if such income included the net
unearned income of all children of the parent to whom this
subsection applies, over
(ii) the tax imposed by this section on the parent without
regard to this subsection.
For purposes of clause (i), net unearned income of all children
of the parent shall not be taken into account in computing any
exclusion, deduction, or credit of the parent.
(B) Child's share
A child's share of any allocable parental tax of a parent
shall be equal to an amount which bears the same ratio to the
total allocable parental tax as the child's net unearned income
bears to the aggregate net unearned income of all children of
such parent to whom this subsection applies.
(C) Special rule where parent has different taxable year
Except as provided in regulations, if the parent does not
have the same taxable year as the child, the allocable parental
tax shall be determined on the basis of the taxable year of the
parent ending in the child's taxable year.
(4) Net unearned income
For purposes of this subsection -
(A) In general
The term "net unearned income" means the excess of -
(i) the portion of the adjusted gross income for the
taxable year which is not attributable to earned income (as
defined in section 911(d)(2)), over
(ii) the sum of -
(I) the amount in effect for the taxable year under
section 63(c)(5)(A) (relating to limitation on standard
deduction in the case of certain dependents), plus
(II) the greater of the amount described in subclause (I)
or, if the child itemizes his deductions for the taxable
year, the amount of the itemized deductions allowed by this
chapter for the taxable year which are directly connected
with the production of the portion of adjusted gross income
referred to in clause (i).
(B) Limitation based on taxable income
The amount of the net unearned income for any taxable year
shall not exceed the individual's taxable income for such
taxable year.
(5) Special rules for determining parent to whom subsection
applies
For purposes of this subsection, the parent whose taxable
income shall be taken into account shall be -
(A) in the case of parents who are not married (within the
meaning of section 7703), the custodial parent (within the
meaning of section 152(e)) of the child, and
(B) in the case of married individuals filing separately, the
individual with the greater taxable income.
(6) Providing of parent's TIN
The parent of any child to whom this subsection applies for any
taxable year shall provide the TIN of such parent to such child
and such child shall include such TIN on the child's return of
tax imposed by this section for such taxable year.
(7) Election to claim certain unearned income of child on
parent's return
(A) In general
If -
(i) any child to whom this subsection applies has gross
income for the taxable year only from interest and dividends
(including Alaska Permanent Fund dividends),
(ii) such gross income is more than the amount described in
paragraph (4)(A)(ii)(I) and less than 10 times the amount so
described,
(iii) no estimated tax payments for such year are made in
the name and TIN of such child, and no amount has been
deducted and withheld under section 3406, and
(iv) the parent of such child (as determined under
paragraph (5)) elects the application of subparagraph (B),
such child shall be treated (other than for purposes of this
paragraph) as having no gross income for such year and shall
not be required to file a return under section 6012.
(B) Income included on parent's return
In the case of a parent making the election under this
paragraph -
(i) the gross income of each child to whom such election
applies (to the extent the gross income of such child exceeds
twice the amount described in paragraph (4)(A)(ii)(I)) shall
be included in such parent's gross income for the taxable
year,
(ii) the tax imposed by this section for such year with
respect to such parent shall be the amount equal to the sum
of -
(I) the amount determined under this section after the
application of clause (i), plus
(II) for each such child, 10 percent of the lesser of the
amount described in paragraph (4)(A)(ii)(I) or the excess
of the gross income of such child over the amount so
described, and
(iii) any interest which is an item of tax preference under
section 57(a)(5) of the child shall be treated as an item of
tax preference of such parent (and not of such child).
(C) Regulations
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this
paragraph.
(h) Maximum capital gains rate
(1) In general
If a taxpayer has a net capital gain for any taxable year, the
tax imposed by this section for such taxable year shall not
exceed the sum of -
(A) a tax computed at the rates and in the same manner as if
this subsection had not been enacted on the greater of -
(i) taxable income reduced by the net capital gain; or
(ii) the lesser of -
(I) the amount of taxable income taxed at a rate below 25
percent; or
(II) taxable income reduced by the adjusted net capital
gain;
(B) 5 percent (0 percent in the case of taxable years
beginning after 2007) of so much of the adjusted net capital
gain (or, if less, taxable income) as does not exceed the
excess (if any) of -
(i) the amount of taxable income which would (without
regard to this paragraph) be taxed at a rate below 25
percent, over
(ii) the taxable income reduced by the adjusted net capital
gain;
(C) 15 percent of the adjusted net capital gain (or, if less,
taxable income) in excess of the amount on which a tax is
determined under subparagraph (B);
(D) 25 percent of the excess (if any) of -
(i) the unrecaptured section 1250 gain (or, if less, the
net capital gain), over
(ii) the excess (if any) of -
(I) the sum of the amount on which tax is determined
under subparagraph (A) plus the net capital gain, over
(II) taxable income; and
(E) 28 percent of the amount of taxable income in excess of
the sum of the amounts on which tax is determined under the
preceding subparagraphs of this paragraph.
(2) Net capital gain taken into account as investment income
For purposes of this subsection, the net capital gain for any
taxable year shall be reduced (but not below zero) by the amount
which the taxpayer takes into account as investment income under
section 163(d)(4)(B)(iii).
(3) Adjusted net capital gain
For purposes of this subsection, the term "adjusted net capital
gain" means the sum of -
(A) net capital gain (determined without regard to paragraph
(11)) reduced (but not below zero) by the sum of -
(i) unrecaptured section 1250 gain, and
(ii) 28-percent rate gain, plus
(B) qualified dividend income (as defined in paragraph (11)).
(4) 28-percent rate gain
For purposes of this subsection, the term "28-percent rate
gain" means the excess (if any) of -
(A) the sum of -
(i) collectibles gain; and
(ii) section 1202 gain, over
(B) the sum of -
(i) collectibles loss;
(ii) the net short-term capital loss; and
(iii) the amount of long-term capital loss carried under
section 1212(b)(1)(B) to the taxable year.
(5) Collectibles gain and loss
For purposes of this subsection -
(A) In general
The terms "collectibles gain" and "collectibles loss" mean
gain or loss (respectively) from the sale or exchange of a
collectible (as defined in section 408(m) without regard to
paragraph (3) thereof) which is a capital asset held for more
than 1 year but only to the extent such gain is taken into
account in computing gross income and such loss is taken into
account in computing taxable income.
(B) Partnerships, etc.
For purposes of subparagraph (A), any gain from the sale of
an interest in a partnership, S corporation, or trust which is
attributable to unrealized appreciation in the value of
collectibles shall be treated as gain from the sale or exchange
of a collectible. Rules similar to the rules of section 751
shall apply for purposes of the preceding sentence.
(6) Unrecaptured section 1250 gain
For purposes of this subsection -
(A) In general
The term "unrecaptured section 1250 gain" means the excess
(if any) of -
(i) the amount of long-term capital gain (not otherwise
treated as ordinary income) which would be treated as
ordinary income if section 1250(b)(1) included all
depreciation and the applicable percentage under section
1250(a) were 100 percent, over
(ii) the excess (if any) of -
(I) the amount described in paragraph (5)(B); over
(II) the amount described in paragraph (5)(A).
(B) Limitation with respect to section 1231 property
The amount described in subparagraph (A)(i) from sales,
exchanges, and conversions described in section 1231(a)(3)(A)
for any taxable year shall not exceed the net section 1231 gain
(as defined in section 1231(c)(3)) for such year.
(7) Section 1202 gain
For purposes of this subsection, the term "section 1202 gain"
means the excess of -
(A) the gain which would be excluded from gross income under
section 1202 but for the percentage limitation in section
1202(a), over
(B) the gain excluded from gross income under section 1202.
(8) Coordination with recapture of net ordinary losses under
section 1231
If any amount is treated as ordinary income under section
1231(c), such amount shall be allocated among the separate
categories of net section 1231 gain (as defined in section
1231(c)(3)) in such manner as the Secretary may by forms or
regulations prescribe.
(9) Regulations
The Secretary may prescribe such regulations as are appropriate
(including regulations requiring reporting) to apply this
subsection in the case of sales and exchanges by pass-thru
entities and of interests in such entities.
(10) Pass-thru entity defined
For purposes of this subsection, the term "pass-thru entity"
means -
(A) a regulated investment company;
(B) a real estate investment trust;
(C) an S corporation;
(D) a partnership;
(E) an estate or trust;
(F) a common trust fund;
(G) a foreign investment company which is described in
section 1246(b)(1) and for which an election is in effect under
section 1247; and
(H) a qualified electing fund (as defined in section 1295).
(11) Dividends taxed as net capital gain
(A) In general
For purposes of this subsection, the term "net capital gain"
means net capital gain (determined without regard to this
paragraph) increased by qualified dividend income.
(B) Qualified dividend income
For purposes of this paragraph -
(i) In general
The term "qualified dividend income" means dividends
received during the taxable year from -
(I) domestic corporations, and
(II) qualified foreign corporations.
(ii) Certain dividends excluded
Such term shall not include -
(I) any dividend from a corporation which for the taxable
year of the corporation in which the distribution is made,
or the preceding taxable year, is a corporation exempt from
tax under section 501 or 521,
(II) any amount allowed as a deduction under section 591
(relating to deduction for dividends paid by mutual savings
banks, etc.), and
(III) any dividend described in section 404(k).
(iii) Coordination with section 246(c)
Such term shall not include any dividend on any share of
stock -
(I) with respect to which the holding period requirements
of section 246(c) are not met (determined by substituting
in section 246(c)(1) "60 days" for "45 days" each place it
appears and by substituting "120-day period" for "90-day
period"), or
(II) to the extent that the taxpayer is under an
obligation (whether pursuant to a short sale or otherwise)
to make related payments with respect to positions in
substantially similar or related property.
(C) Qualified foreign corporations
(i) In general
Except as otherwise provided in this paragraph, the term
"qualified foreign corporation" means any foreign corporation
if -
(I) such corporation is incorporated in a possession of
the United States, or
(II) such corporation is eligible for benefits of a
comprehensive income tax treaty with the United States
which the Secretary determines is satisfactory for purposes
of this paragraph and which includes an exchange of
information program.
(ii) Dividends on stock readily tradable on United States
securities market
A foreign corporation not otherwise treated as a qualified
foreign corporation under clause (i) shall be so treated with
respect to any dividend paid by such corporation if the stock
with respect to which such dividend is paid is readily
tradable on an established securities market in the United
States.
(iii) Exclusion of dividends of certain foreign corporations
Such term shall not include any foreign corporation which
for the taxable year of the corporation in which the dividend
was paid, or the preceding taxable year, is a foreign
personal holding company (as defined in section 552), a
foreign investment company (as defined in section 1246(b)),
or a passive foreign investment company (as defined in
section 1297).
(iv) Coordination with foreign tax credit limitation
Rules similar to the rules of section 904(b)(2)(B) shall
apply with respect to the dividend rate differential under
this paragraph.
(D) Special rules
(i) Amounts taken into account as investment income
Qualified dividend income shall not include any amount
which the taxpayer takes into account as investment income
under section 163(d)(4)(B).
(ii) Extraordinary dividends
If an individual receives, with respect to any share of
stock, qualified dividend income from 1 or more dividends
which are extraordinary dividends (within the meaning of
section 1059(c)), any loss on the sale or exchange of such
share shall, to the extent of such dividends, be treated as
long-term capital loss.
(iii) Treatment of dividends from regulated investment
companies and real estate investment trusts
A dividend received from a regulated investment company or
a real estate investment trust shall be subject to the
limitations prescribed in sections 854 and 857.
(i) Rate reductions after 2000
(1) 10-percent rate bracket
(A) In general
In the case of taxable years beginning after December 31,
2000 -
(i) the rate of tax under subsections (a), (b), (c), and
(d) on taxable income not over the initial bracket amount
shall be 10 percent, and
(ii) the 15 percent rate of tax shall apply only to taxable
income over the initial bracket amount but not over the
maximum dollar amount for the 15-percent rate bracket.
(B) Initial bracket amount
For purposes of this paragraph, the initial bracket amount is
-
(i) $14,000 ($12,000 in the case of taxable years beginning
after December 31, 2004, and before January 1, 2008) in the
case of subsection (a),
(ii) $10,000 in the case of subsection (b), and
(iii) 1/2 the amount applicable under clause (i) (after
adjustment, if any, under subparagraph (C)) in the case of
subsections (c) and (d).
(C) Inflation adjustment
In prescribing the tables under subsection (f) which apply
with respect to taxable years beginning in calendar years after
2000 -
(i) except as provided in clause (ii), the Secretary shall
make no adjustment to the initial bracket amounts for any
taxable year beginning before January 1, 2009,
(ii) there shall be an adjustment under subsection (f) of
such amounts which shall apply only to taxable years
beginning in 2004, and such adjustment shall be determined
under subsection (f)(3) by substituting "2002" for "1992" in
subparagraph (B) thereof,
(iii) the cost-of-living adjustment used in making
adjustments to the initial bracket amounts for any taxable
year beginning after December 31, 2008, shall be determined
under subsection (f)(3) by substituting "2007" for "1992" in
subparagraph (B) thereof, and
(iv) the adjustments under clauses (ii) and (iii) shall not
apply to the amount referred to in subparagraph (B)(iii).
If any amount after adjustment under the preceding sentence is
not a multiple of $50, such amount shall be rounded to the next
lowest multiple of $50.
(D) Coordination with acceleration of 10 percent rate bracket
benefit for 2001
This paragraph shall not apply to any taxable year to which
section 6428 applies.
(2) Reductions in rates after June 30, 2001
In the case of taxable years beginning in a calendar year after
2000, the corresponding percentage specified for such calendar
year in the following table shall be substituted for the
otherwise applicable tax rate in the tables under subsections
(a), (b), (c), (d), and (e).
The corresponding percentages shall be substituted
for
the following percentages:
28% 31% 36% 39.6%
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2001 27.5% 30.5% 35.5% 39.1%
2002 27.0% 30.0% 35.0% 38.6%
2003 and thereafter 25.0% 28.0% 33.0% 35.0%
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(3) Adjustment of tables
The Secretary shall adjust the tables prescribed under
subsection (f) to carry out this subsection.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 5; Pub. L. 88-272, title I, Sec.
111, Feb. 26, 1964, 78 Stat. 19; Pub. L. 89-809, title I, Sec.
103(a)(2), Nov. 13, 1966, 80 Stat. 1550; Pub. L. 91-172, title
VIII, Sec. 803(a), Dec. 30, 1969, 83 Stat. 678; Pub. L. 95-30,
title I, Sec. 101(a), May 23, 1977, 91 Stat. 127; Pub. L. 95-600,
title I, Sec. 101(a), Nov. 6, 1978, 92 Stat. 2767; Pub. L. 97-34,
title I, Secs. 101(a), 104(a), Aug. 13, 1981, 95 Stat. 176, 188;
Pub. L. 97-448, title I, Sec. 101(a)(3), Jan. 12, 1983, 96 Stat.
2366; Pub. L. 99-514, title I, Sec. 101(a), title III, Sec. 302(a),
title XIV, Sec. 1411(a), Oct. 22, 1986, 100 Stat. 2096, 2218, 2714;
Pub. L. 100-647, title I, Secs. 1001(a)(3), 1014(e)(1)-(3), (6),
(7), title VI, Sec. 6006(a), Nov. 10, 1988, 102 Stat. 3349, 3561,
3562, 3686; Pub. L. 101-239, title VII, Secs. 7811(j)(1), 7816(b),
7831(a), Dec. 19, 1989, 103 Stat. 2411, 2420, 2425; Pub. L.
101-508, title XI, Secs. 11101(a)-(c), (d)(1)(A), (2), 11103(c),
11104(b), Nov. 5, 1990, 104 Stat. 1388-403 to 1388-406, 1388-408;
Pub. L. 103-66, title XIII, Secs. 13201(a), (b)(3)(A), (B),
13202(a), 13206(d)(2), Aug. 10, 1993, 107 Stat. 457, 459, 461, 467;
Pub. L. 104-188, title I, Sec. 1704(m)(1), (2), Aug. 20, 1996, 110
Stat. 1882, 1883; Pub. L. 105-34, title III, Sec. 311(a), Aug. 5,
1997, 111 Stat. 831; Pub. L. 105-206, title V, Sec. 5001(a)(1)-(4),
title VI, Secs. 6005(d)(1), 6007(f)(1), July 22, 1998, 112 Stat.
787, 788, 800, 810; Pub. L. 105-277, div. J, title IV, Sec.
4002(i)(1), (3), Oct. 21, 1998, 112 Stat. 2681-907, 2681-908; Pub.
L. 106-554, Sec. 1(a)(7) [title I, Sec. 117(b)(1)], Dec. 21, 2000,
114 Stat. 2763, 2763A-604; Pub. L. 107-16, title I, Sec. 101(a),
(c)(1), (2), title III, Secs. 301(c)(1), 302(a), (b), June 7, 2001,
115 Stat. 41, 43, 54; Pub. L. 108-27, title I, Secs. 102(a),
(b)(1), 104(a), (b), 105(a), title III, Secs. 301(a)(1), (2)(A),
(b)(1), 302(a), (e)(1), May 28, 2003, 117 Stat. 754, 755, 758, 760,
763.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by sections 107 and 303 of Pub. L.
108-27, see Effective and Termination Dates of 2003 Amendment note
below.
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
TAX TABLES FOR TAXABLE YEARS BEGINNING IN 2004
Revenue Procedure 2003-85 provided:
Section 1. Purpose
This revenue procedure sets forth inflation adjusted items for
2004.
Section 2. Changes
.01 The initial bracket amounts for the 10% tax rate for married
individuals filing joint returns and surviving spouses under Sec.
1(a) of the Internal Revenue Code, and heads of households under
Sec. 1(b) are adjusted for inflation under Sec. 1(i)(1)(C)(ii).
Under Sec. 1(i)(1)(B)(iii) the initial bracket amounts for Sec.
1(c) (unmarried individuals (other than surviving spouses and heads
of households)) and Sec. 1(d) (married individuals filing separate
returns) are equal to the initial bracket amount of Sec. 1(a)
(married individuals filing joint returns and surviving spouses)
after adjustment for inflation.
.02 The amounts deemed substantiated when paid by eligible
employers in the transportation mainline pipeline construction
industry under an accountable plan to employees in accordance with
Rev. Proc. 2002-41, 2002-1 C.B. 1098, are adjusted for inflation.
(Section 3.09).
.03 The dollar amount in Sec. 179(b)(1) used to determine the
dollar limitation of the aggregate cost that may be taken into
account under Sec. 179(a) and the dollar amount in Sec. 179(b)(2)
used to calculate a reduction in the dollar limitation are adjusted
for inflation. (Section 3.17).
.04 The generation-skipping transfer tax exemption under Sec.
2631, which is allowed in determining the "inclusion ratio" defined
in Sec. 2642, is no longer adjusted for inflation and has been
deleted.
Section 3. 2004 Adjusted Items
.01 Tax Rate Tables. For taxable years beginning in 2004, the tax
rate tables under Sec. 1 are as follows:
TABLE 1 - SECTION 1(A). - MARRIED INDIVIDUALS FILING JOINT RETURNS
AND SURVIVING SPOUSES
--------------------------------------------------------------------
If Taxable Income Is: The Tax Is:
--------------------------------------------------------------------
Not Over $14,300 10% of the taxable income
Over $14,300 but not over $1,430 plus 15% of excess over
$58,100 $14,300
Over $58,100 but not over $8,000 plus 25% of excess over
$117,250 $58,100
Over $117,250 but not over $22,787.50 plus 28% of excess over
$178,650 $117,250
Over $178,650 but not over $39,979.50 plus 33% of excess over
$319,100 $178,650
Over $319,100 $86,328 plus 35% of excess over
$319,100
--------------------------------------------------------------------
TABLE 2 - SECTION 1(B). - HEADS OF HOUSEHOLDS
--------------------------------------------------------------------
If Taxable Income Is: The Tax Is:
--------------------------------------------------------------------
Not Over $10,200 10% of the taxable income
Over $10,200 but not over $1,020 plus 15% of excess over
$38,900 $10,200
Over $38,900 but not over $5,325 plus 25% of the excess over
$100,500 $38,900
Over $100,500 but not over $20,725 plus 28% of the excess
$162,700 over $100,500
Over $162,700 but not over $38,141 plus 33% of the excess
$319,100 over $162,700
Over $319,100 $89,753 plus 35% of the excess
over $319,100
--------------------------------------------------------------------
TABLE 3 - SECTION 1(C). - UNMARRIED INDIVIDUALS (OTHER THAN
SURVIVING SPOUSES AND HEADS OF HOUSEHOLDS)
--------------------------------------------------------------------
If Taxable Income Is: The Tax Is:
--------------------------------------------------------------------
Not Over $7,150 10% of the taxable income
Over $7,150 but not over $715 plus 15% of the excess over
$29,050 $7,150
Over $29,050 but not over $4,000 plus 25% of the excess over
$70,350 $29,050
Over $70,350 but not over $14,325 plus 28% of the excess
$146,750 over $70,350
Over $146,750 but not over $35,717 plus 33% of the excess
$319,100 over $146,750
Over $319,100 $92,592.50 plus 35% of the excess
over $319,100
--------------------------------------------------------------------
TABLE 4 - SECTION 1(D). - MARRIED INDIVIDUALS FILING SEPARATE
RETURNS
--------------------------------------------------------------------
If Taxable Income Is: The Tax Is:
--------------------------------------------------------------------
Not Over $7,150 10% of the taxable income
Over $7,150 but not over $715 plus 15% of the excess over
$29,050 $7,150
Over $29,050 but not over $4,000 plus 25% of the excess over
$58,625 $29,050
Over $58,625 but not over $11,393.75 plus 28% of the excess
$89,325 over $58,625
Over $89,325 but not over $19,989.75 plus 33% of the excess
$159,550 over $89,325
Over $159,550 $43,164 plus 35% of the excess
over $159,550
--------------------------------------------------------------------
TABLE 5 - SECTION 1(E). - ESTATES AND TRUSTS
--------------------------------------------------------------------
If Taxable Income Is: The Tax Is:
--------------------------------------------------------------------
Not Over $1,950 15% of the taxable income
Over $1,950 but not over $292.50 plus 25% of the excess
$4,600 over $1,950
Over $4,600 but not over $955 plus 28% of the excess over
$7,000 $4,600
Over $7,000 but not over $1,627 plus 33% of the excess over
$9,550 $7,000
Over $9,550 $2,468.50 plus 35% of the excess
over $9,550
--------------------------------------------------------------------
.02 Unearned Income of Minor Children Taxed as if Parent's Income
(the "Kiddie Tax"). For taxable years beginning in 2004, the amount
in Sec. 1(g)(4)(A)(ii)(I), which is used to reduce the net unearned
income reported on the child's return that is subject to the
"kiddie tax," is $800. (This amount is the same as the $800
standard deduction amount provided in section 3.10(2) of this
revenue procedure.) The same $800 amount is used for purposes of
Sec. 1(g)(7) (that is, in determining whether a parent may elect to
include a child's gross income in the parent's gross income and for
calculating the "kiddie tax"). For example, one of the requirements
for the parental election is that a child's gross income is more
than the amount referenced in Sec. 1(g)(4)(A)(ii)(I) but less than
10 times such amount; thus, a child's gross income for 2004 must be
more than $800 but less than $8,000 to satisfy that requirement.
.03 Adoption Credit. For taxable years beginning in 2004, under
Sec. 23(a)(3) the maximum credit allowed for an adoption of a child
with special needs is $10,390. For taxable years beginning in 2004,
under Sec. 23(b)(1) the maximum credit allowed with regard to other
adoptions is the amount of qualified adoption expenses up to
$10,390. The available adoption credit begins to phase out under
Sec. 23(b)(2)(A) for taxpayers with modified adjusted gross income
in excess of $155,860 and is completely phased out for taxpayers
with modified adjusted gross income of $195,860. (See section 3.14
for the adjusted items relating to adoption assistance programs.)
.04 Child Tax Credit. For taxable years beginning in 2004, the
value used in Sec. 24(d)(1)(B)(i) in determining the amount of
credit under Sec. 24 that may be refundable is $10,750.
.05 Hope and Lifetime Learning Credits.
(1) For taxable years beginning in 2004, 100 percent of qualified
tuition and related expenses not in excess of $1,000 and 50 percent
of such expenses in excess of $1,000 are taken into account in
determining the amount of the Hope Scholarship Credit under Sec.
25A(b)(1).
(2) For taxable years beginning in 2004, a taxpayer's modified
adjusted gross income in excess of $42,000 ($85,000 for a joint
return) is taken into account in determining the reduction under
Sec. 25A(d)(2)(A)(ii) in the amount of the Hope Scholarship and
Lifetime Learning Credits otherwise allowable under Sec. 25A(a).
.06 Earned Income Credit.
(1) In general. For taxable years beginning in 2004, the
following amounts are used to determine the earned income credit
under Sec. 32(b). The "earned income amount" is the amount of
earned income at or above which the maximum amount of the earned
income credit is allowed. The "threshold phaseout amount" is the
amount of adjusted gross income (or, if greater, earned income)
above which the maximum amount of the credit begins to phase out.
The "completed phaseout amount" is the amount of adjusted gross
income (or if greater, earned income) at or above which no credit
is allowed.
Item Number of Qualifying Children
One Two or None
More
--------------------------------------------------------------------
Earned Income Amount $ 7,660 $10,750 $ 5,100
Maximum Amount of Credit $ 2,604 $ 4,300 $ 390
Threshold Phaseout Amount $14,040 $14,040 $ 6,390
Completed Phaseout Amount $30,338 $34,458 $11,490
Threshold Phaseout Amount $15,040 $15,040 $ 7,390
(Married Filing Jointly)
Completed Phaseout Amount $31,338 $35,458 $12,490
(Married Filing Jointly)
--------------------------------------------------------------------
The instructions for the Form 1040 series provide tables showing
the amount of the earned income credit for each type of taxpayer.
(2) Excessive investment income. For taxable years beginning in
2004, the earned income tax credit is denied under Sec. 32(i) if
the aggregate amount of certain investment income exceeds $2,650.
.07 Low-Income Housing Credit. For calendar years beginning in
2004, the amounts used under Sec. 42(h)(3)(C)(ii) to calculate the
State housing credit ceiling for the low-income housing credit is
the greater of $1.80 multiplied by the State population or
$2,075,000.
.08 Alternative Minimum Tax Exemption for a Child Subject to the
"Kiddie Tax." For taxable years beginning in 2004, for a child to
whom the Sec. 1(g) "kiddie tax" applies, the exemption amount under
Secs. 55 and 59(j) for purposes of the alternative minimum tax
under Sec. 55 may not exceed the sum of (A) such child's earned
income for the taxable year, plus (B) $5,750.
.09 Transportation Mainline Pipeline Construction Industry
Optional Expense Substantiation Rules for Payments to Employees
under Accountable Plans. For calendar years beginning in 2004, an
eligible employer may pay certain welders and heavy equipment
mechanics an amount of up to $13 per hour for rig-related expenses
that is deemed substantiated under an accountable plan when paid in
accordance with Rev. Proc. 2002-41. If the employer provides fuel
or otherwise reimburses fuel expenses, up to $8 per hour is deemed
substantiated when paid under Rev. Proc. 2002-41.
.10 Standard Deduction.
(1) In general. For taxable years beginning in 2004, the standard
deduction amounts under Sec. 63(c)(2) are as follows:
Filing Status Standard
Deduction
--------------------------------------------------------------------
Married Individuals Filing Joint Returns and $9,700
Surviving Spouses (Sec. 1(a))
Heads of Households (Sec. 1(b)) $7,150
Unmarried Individuals (other than Surviving Spouses $4,850
and Heads of Households) (Sec. 1(c))
Married Individuals Filing Separate Returns (Sec. $4,850
1(d))
--------------------------------------------------------------------
(2) Dependent. For taxable years beginning in 2004, the standard
deduction amount under Sec. 63(c)(5) for an individual who may be
claimed as a dependent by another taxpayer may not exceed the
greater of $800, or the sum of $250 and the individual's earned
income.
(3) Aged and blind. For taxable years beginning in 2004, the
additional standard deduction amounts under Sec. 63(f) for the aged
and for the blind are $950 for each. These amounts are increased to
$1,200 if the individual is also unmarried and not a surviving
spouse.
.11 Overall Limitation on Itemized Deductions. For taxable years
beginning in 2004, the "applicable amount" of adjusted gross income
under Sec. 68(b), above which the amount of otherwise allowable
itemized deductions is reduced under Sec. 68, is $142,700 (or
$71,350 for a separate return filed by a married individual).
.12 Qualified Transportation Fringe. For taxable years beginning
in 2004, the monthly limitation under Sec. 132(f)(2)(A), regarding
the aggregate fringe benefit exclusion amount for transportation in
a commuter highway vehicle and any transit pass, is $100. The
monthly limitation under Sec. 132(f)(2)(B) regarding the fringe
benefit exclusion amount for qualified parking is $195.
.13 Income from United States Savings Bonds for Taxpayers Who Pay
Qualified Higher Education Expenses. For taxable years beginning in
2004, the exclusion under Sec. 135, regarding income from United
States savings bonds for taxpayers who pay qualified higher
education expenses, begins to phase out for modified adjusted gross
income above $89,750 for joint returns and $59,850 for other
returns. This exclusion completely phases out for modified adjusted
gross income of $119,750 or more for joint returns and $74,850 or
more for other returns.
.14 Adoption Assistance Programs. For taxable years beginning in
2004, under Sec. 137(a)(2) the maximum amount that can be excluded
from an employee's gross income in connection with the adoption by
the employee of a child with special needs is $10,390. For taxable
years beginning in 2004, under Sec. 137(b)(1) the maximum amount
that can be excluded from an employee's gross income for the
amounts paid or expenses incurred by the employer for qualified
adoption expenses furnished pursuant to an adoption assistance
program in connection with other adoptions by the employee is
$10,390. The amount excludable from an employee's gross income
begins to phase out under Sec. 137(b)(2)(A) for taxpayers with
modified adjusted gross income in excess of $155,860 and is
completely phased out for taxpayers with modified adjusted gross
income of $195,860. (See section 3.03 for the adjusted items
relating to the adoption credit.)
.15 Private Activity Bonds Volume Cap. For calendar years
beginning in 2004, the amounts used under Sec. 146(d)(1) to
calculate the State ceiling for the volume cap for private activity
bonds is the greater of $80 multiplied by the State population or
$233,795,000.
.16 Personal Exemption.
(1) Exemption amount. For taxable years beginning in 2004, the
personal exemption amount under Sec. 151(d) is $3,100.
(2) Phase out. For taxable years beginning in 2004, the personal
exemption amount begins to phase out at, and is completely phased
out after, the following adjusted gross income amounts:
Filing Status AGI - AGI -
Beginning Exemption
of Phaseout Fully Phased
Out
--------------------------------------------------------------------
Married Individuals Filing $214,050 $336,550
Joint Returns and
Surviving Spouse (Sec. 1(a)
Heads of Households (Sec. $178,350 $300,850
1(b))
Unmarried Individuals $142,700 $265,200
(other than Surviving
Spouses and Heads of
Households) (Sec. 1(c))
Married Individuals Filing $107,025 $168,275
Separate Returns (Sec. 1(d)
--------------------------------------------------------------------
.17 Election to Expense Certain Depreciable Assets. For taxable
years beginning in 2004, under Sec. 179(b)(1), the aggregate cost
of any Sec. 179 property a taxpayer may elect to treat as an
expense shall not exceed $102,000. Under Sec. 179(b)(2), the
$102,000 limitation shall be reduced (but not below zero) by the
amount by which the cost of Sec. 179 property placed in service
during the 2004 taxable year exceeds $410,000.
.18 Eligible Long-Term Care Premiums. For taxable years beginning
in 2004, the limitations under Sec. 213(d)(10), regarding eligible
long-term care premiums includible in the term "medical care," are
as follows:
Attained age before the close of the taxable year Limi
tation
on
prem
iums
--------------------------------------------------------------------
40 or less $ 260
More than 40 but not more than 50 $ 490
More than 50 but not more than 60 $ 980
More than 60 but not more than 70 $2,600
More than 70 $3,250
--------------------------------------------------------------------
.19 Medical Savings Accounts.
(1) Self-only coverage. For taxable years beginning in 2004, the
term "high deductible health plan" as defined in Sec. 220(c)(2)(A)
means, for self-only coverage, a health plan that has an annual
deductible that is not less than $1,700 and not more than $2,600,
and under which the annual out-of-pocket expenses required to be
paid (other than for premiums) for covered benefits does not exceed
$3,450.
(2) Family coverage. For taxable years beginning in 2004, the
term "high deductible health plan" means, for family coverage, a
health plan that has an annual deductible that is not less than
$3,450 and not more than $5,150, and under which the annual
out-of-pocket expenses required to be paid (other than for
premiums) for covered benefits does not exceed $6,300.
.20 Interest on Education Loans. For taxable years beginning in
2004, the $2,500 maximum deduction for interest paid on qualified
education loans under Sec. 221 is reduced under Sec. 221(b)(2)(B)
when modified adjusted gross income exceeds $50,000 ($100,000 for
joint returns), and is completely eliminated when modified adjusted
gross income is $65,000 ($130,000 for joint returns).
.21 Treatment of Dues Paid to Agricultural or Horticultural
Organizations. For taxable years beginning in 2004, the limitation
under Sec. 512(d)(1), regarding the exemption of annual dues
required to be paid by a member to an agricultural or horticultural
organization, is $124.
.22 Insubstantial Benefit Limitations for Contributions
Associated with Charitable Fund-Raising Campaigns.
(1) Low cost article. For taxable years beginning in 2004, the
unrelated business income of certain exempt organizations under
Sec. 513(h)(2) does not include a "low cost article" of $8.20 or
less.
(2) Other insubstantial benefits. For taxable years beginning in
2004, the $5, $25, and $50 guidelines in section 3 of Rev. Proc.
90-12, 1990-1 C.B. 471 (as amplified and modified), for
disregarding the value of insubstantial benefits received by a
donor in return for a fully deductible charitable contribution
under Sec. 170, are $8.20, $41 and $82, respectively.
.23 Funeral Trusts. For a contract entered into during calendar
year 2004 for a "qualified funeral trust," as defined in Sec. 685,
the trust may not accept aggregate contributions by or for the
benefit of an individual in excess of $8,000.
.24 Expatriation to Avoid Tax. For calendar year 2004, the
amounts used under Sec. 877(a)(2), regarding whether an
individual's loss of United States citizenship had the avoidance of
United States taxes as one of its principal purposes, are more than
$124,000 for "average annual net income tax" and $622,000 or more
for "net worth."
.25 Valuation of Qualified Real Property in Decedent's Gross
Estate. For an estate of a decedent dying in calendar year 2004, if
the executor elects to use the special use valuation method under
Sec. 2032A for qualified real property, the aggregate decrease in
the value of qualified real property resulting from electing to use
Sec. 2032A that is taken into account for purposes of the estate
tax may not exceed $850,000.
.26 Annual Exclusion for Gifts.
(1) For calendar year 2004, the first $11,000 of gifts to any
person (other than gifts of future interests in property) are not
included in the total amount of taxable gifts under Sec. 2503 made
during that year.
(2) For calendar year 2004, the first $114,000 of gifts to a
spouse who is not a citizen of the United States (other than gifts
of future interests in property) are not included in the total
amount of taxable gifts under Secs. 2503 and 2523(i)(2) made during
that year.
.27 Passenger Air Transportation Excise Tax. For calendar year
2004, the tax under Sec. 4261(b) on the amount paid for each
domestic segment of taxable transportation by air is $3.10. For
calendar year 2004, the tax under Sec. 4261(c) on any amount paid
(whether within or without the United States) for any
transportation of any person by air, if such transportation begins
or ends in the United States, generally is $13.70. However, in the
case of a domestic segment beginning or ending in Alaska or Hawaii
as described in Sec. 4261(c)(3), the tax only applies to departures
and is at the rate of $6.90.
.28 Reporting Exception for Certain Exempt Organizations with
Nondeductible Lobbying Expenditures. For taxable years beginning in
2004, the annual per person, family, or entity dues limitation to
qualify for the reporting exception under Sec. 6033(e)(3) (and
section 5.05 of Rev. Proc. 98-19, 1998-1 C.B. 547), regarding
certain exempt organizations with nondeductible lobbying
expenditures, is $86 or less.
.29 Notice of Large Gifts Received from Foreign Persons. For
taxable years beginning in 2004, recipients of gifts from certain
foreign persons may be required to report these gifts under Sec.
6039F if the aggregate value of gifts received in a taxable year
exceeds $12,097.
.30 Persons Against Which a Federal Tax Lien Is Not Valid. For
calendar year 2004, a federal tax lien is not valid against (1)
certain purchasers under Sec. 6323(b)(4) who purchased personal
property in a casual sale for less than $1,180 or (2) a mechanic's
lienor under Sec. 6323(b)(7) that repaired or improved certain
residential property if the contract price with the owner is not
more than $5,890.
.31 Property Exempt from Levy. For calendar year 2004, the value
of property exempt from levy under Sec. 6334(a)(2) (fuel,
provisions, furniture, and other household personal effects, as
well as arms for personal use, livestock, and poultry) may not
exceed $7,040. The value of property exempt from levy under Sec.
6334(a)(3) (books and tools necessary for the trade, business, or
profession of the taxpayer) may not exceed $3,520.
.32 Interest on a Certain Portion of the Estate Tax Payable in
Installments. For an estate of a decedent dying in calendar year
2004, the dollar amount used to determine the "2-percent portion"
(for purposes of calculating interest under Sec. 6601(j)) of the
estate tax extended as provided in Sec. 6166 is $1,140,000.
.33 Attorney Fee Awards. For fees incurred in calendar year 2004,
the attorney fee award limitation under Sec. 7430(c)(1)(B)(iii) is
$150 per hour.
.34 Periodic Payments Received under Qualified Long-Term Care
Insurance Contracts or under Certain Life Insurance Contracts. For
calendar year 2004, the stated dollar amount of the per diem
limitation under Sec. 7702B(d)(4), regarding periodic payments
received under a qualified long-term care insurance contract or
periodic payments received under a life insurance contract that are
treated as paid by reason of the death of a chronically ill
individual, is $230.
Section 4. Effective Date
.01 General Rule. Except as provided in section 4.02, this
revenue procedure applies to taxable years beginning in 2004.
.02 Calendar Year Rule. This revenue procedure applies to
transactions or events occurring in calendar year 2004 for purposes
of sections 3.07 (low-income housing credit), 3.09 (pipeline
construction industry optional expense substantiation rules), 3.15
(private activity bond volume cap), 3.23 (funeral trusts), 3.24
(expatriation to avoid tax), 3.25 (valuation of qualified real
property in decedent's gross estate), 3.26 (annual exclusion for
gifts), 3.27 (passenger air transportation excise tax), 3.30
(persons against which a federal tax lien is not valid), 3.31
(property exempt from levy), 3.32 (interest on a certain portion of
the estate tax payable in installments), 3.33 (attorney fee
awards), and 3.34 (periodic payments received under qualified
long-term care insurance contracts or under certain life insurance
contracts).
Section 5. Drafting Information
[Omitted-related to author of this revenue procedure.]
TAX TABLES FOR PRIOR TAX YEARS
Inflation adjusted items for certain prior tax years were
contained in the following:
Revenue Procedure 2002-70 provided inflation adjusted items for
tax years beginning in 2003.
Revenue Procedure 2001-59 provided inflation adjusted items for
tax years beginning in 2002.
Revenue Procedure 2001-13 provided inflation adjusted items for
tax years beginning in 2001.
Revenue Procedure 99-42 provided inflation adjusted items for tax
years beginning in 2000.
Revenue Procedure 98-61 provided inflation adjusted items for tax
years beginning in 1999.
Revenue Procedure 97-57 provided inflation adjusted items for tax
years beginning in 1998.
Revenue Procedure 96-59 provided inflation adjusted items for tax
years beginning in 1997.
Revenue Procedure 95-53 provided inflation adjusted items for tax
years beginning in 1996.
Revenue Procedure 94-72 provided inflation adjusted items for tax
years beginning in 1995.
Revenue Procedure 93-49 provided inflation adjusted items for tax
years beginning in 1994.
Revenue Procedure 92-102 provided inflation adjusted items for
tax years beginning in 1993.
Revenue Procedure 91-65 provided inflation adjusted items for tax
years beginning in 1992.
Revenue Procedure 90-64 provided inflation adjusted items for tax
years beginning in 1991.
Revenue Procedure 90-7 provided inflation adjusted items for tax
years beginning in 1990.
Revenue Procedure 88-56 provided inflation adjusted items for tax
years beginning in 1989.
Revenue Procedure 85-55 provided income tax cost-of-living
adjustment (indexing) factor with respect to taxable years
beginning in 1986.
Revenue Procedure 84-79 provided income tax cost-of-living
adjustment (indexing) factor with respect to taxable years
beginning in 1985.
-REFTEXT-
REFERENCES IN TEXT
The enactment of this clause, referred to in subsec.
(h)(13)(A)(iii), means the date of enactment of Pub. L. 105-206,
which was approved July 22, 1998.
-MISC1-
AMENDMENTS
2003 - Subsec. (f)(8)(A). Pub. L. 108-27, Secs. 102(b)(1), 107,
temporarily substituted "2002" for "2004". See Effective and
Termination Dates of 2003 Amendment note below.
Subsec. (f)(8)(B). Pub. L. 108-27, Secs. 102(a), 107, temporarily
inserted table item relating to years 2003 and 2004. See Effective
and Termination Dates of 2003 Amendment note below.
Subsec. (h)(1)(B). Pub. L. 108-27, Secs. 301(a)(1), 303,
temporarily substituted "5 percent (0 percent in the case of
taxable years beginning after 2007)" for "10 percent". See
Effective and Termination Dates of 2003 Amendment note below.
Subsec. (h)(1)(C). Pub. L. 108-27, Secs. 301(a)(2)(A), 303,
temporarily substituted "15 percent" for "20 percent". See
Effective and Termination Dates of 2003 Amendment note below.
Subsec. (h)(2). Pub. L. 108-27, Secs. 301(b)(1)(A), (B), 303,
temporarily redesignated par. (3) as (2) and struck out heading and
text of former par. (2). Text read as follows:
"(A) Reduction in 10-percent rate. - In the case of any taxable
year beginning after December 31, 2000, the rate under paragraph
(1)(B) shall be 8 percent with respect to so much of the amount to
which the 10-percent rate would otherwise apply as does not exceed
qualified 5-year gain, and 10 percent with respect to the remainder
of such amount.
"(B) Reduction in 20-percent rate. - The rate under paragraph
(1)(C) shall be 18 percent with respect to so much of the amount to
which the 20-percent rate would otherwise apply as does not exceed
the lesser of -
"(i) the excess of qualified 5-year gain over the amount of
such gain taken into account under subparagraph (A) of this
paragraph; or
"(ii) the amount of qualified 5-year gain (determined by taking
into account only property the holding period for which begins
after December 31, 2000),
and 20 percent with respect to the remainder of such amount. For
purposes of determining under the preceding sentence whether the
holding period of property begins after December 31, 2000, the
holding period of property acquired pursuant to the exercise of an
option (or other right or obligation to acquire property) shall
include the period such option (or other right or obligation) was
held." See Effective and Termination Dates of 2003 Amendment note
below.
Subsec. (h)(3). Pub. L. 108-27, Secs. 302(e)(1), 303, temporarily
amended heading and text of par. (3) generally. Prior to amendment,
text read as follows: "For purposes of this subsection, the term
'adjusted net capital gain' means net capital gain reduced (but not
below zero) by the sum of -
"(A) unrecaptured section 1250 gain; and
"(B) 28-percent rate gain." See Effective and Termination Dates
of 2003 Amendment note below.
Pub. L. 108-27, Secs. 301(b)(1)(B), 303, temporarily redesignated
par. (4) as (3). Former par. (3) temporarily redesignated (2). See
Effective and Termination Dates of 2003 Amendment note below.
Subsec. (h)(4) to (7). Pub. L. 108-27, Secs. 301(b)(1)(B), 303,
temporarily redesignated pars. (5) to (8) as (4) to (7),
respectively. Former par. (4) temporarily redesignated (3). See
Effective and Termination Dates of 2003 Amendment note below.
Subsec. (h)(8). Pub. L. 108-27, Secs. 301(b)(1)(C), 303,
temporarily redesignated par. (10) as (8). Former par. (8)
temporarily redesignated (7). See Effective and Termination Dates
of 2003 Amendment note below.
Subsec. (h)(9). Pub. L. 108-27, Secs. 301(b)(1)(A), (C), 303,
temporarily redesignated par. (11) as (9) and struck out heading
and text of former par. (9). Text read as follows: "For purposes of
this subsection, the term 'qualified 5-year gain' means the
aggregate long-term capital gain from property held for more than 5
years. The determination under the preceding sentence shall be made
without regard to collectibles gain, gain described in paragraph
(7)(A)(i), and section 1202 gain." See Effective and Termination
Dates of 2003 Amendment note below.
Subsec. (h)(10). Pub. L. 108-27, Secs. 301(b)(1)(C), 303,
temporarily redesignated par. (12) as (10). Former par. (10)
temporarily redesignated (8). See Effective and Termination Dates
of 2003 Amendment note below.
Subsec. (h)(11). Pub. L. 108-27, Secs. 302(a), 303, temporarily
added par. (11). See Effective and Termination Dates of 2003
Amendment note below.
Pub. L. 108-27, Secs. 301(b)(1)(C), 303, temporarily redesignated
par. (11) as (9). See Effective and Termination Dates of 2003
Amendment note below.
Subsec. (h)(12). Pub. L. 108-27, Secs. 301(b)(1)(C), 303,
temporarily redesignated par. (12) as (10). See Effective and
Termination Dates of 2003 Amendment note below.
Subsec. (i)(1)(B)(i). Pub. L. 108-27, Secs. 104(a), 107,
temporarily substituted "($12,000 in the case of taxable years
beginning after December 31, 2004, and before January 1, 2008)" for
"($12,000 in the case of taxable years beginning before January 1,
2008)". See Effective and Termination Dates of 2003 Amendment note
below.
Subsec. (i)(1)(C). Pub. L. 108-27, Secs. 104(b), 107, temporarily
amended heading and text of subpar. (C) generally. Text read as
follows: "In prescribing the tables under subsection (f) which
apply with respect to taxable years beginning in calendar years
after 2000 -
"(i) the Secretary shall make no adjustment to the initial
bracket amount for any taxable year beginning before January 1,
2009,
"(ii) the cost-of-living adjustment used in making adjustments
to the initial bracket amount for any taxable year beginning
after December 31, 2008, shall be determined under subsection
(f)(3) by substituting '2007' for '1992' in subparagraph (B)
thereof, and
"(iii) such adjustment shall not apply to the amount referred
to in subparagraph (B)(iii).
If any amount after adjustment under the preceding sentence is not
a multiple of $50, such amount shall be rounded to the next lowest
multiple of $50." See Effective and Termination Dates of 2003
Amendment note below.
Subsec. (i)(2). Pub. L. 108-27, Secs. 105(a), 107, temporarily
amended table generally. Prior to amendment, table read as follows:
The corresponding percentages shall be
substituted for
the following percentages:
28% 31% 36% 39.6%
--------------------------------------------------------------------
2001 27.5% 30.5% 35.5% 39.1%
2002 and 2003 27.0% 30.0% 35.0% 38.6%
2004 and 2005 26.0% 29.0% 34.0% 37.6%
2006 and thereafter 25.0% 28.0% 33.0% 35.0%"
--------------------------------------------------------------------
See Effective and Termination Dates of 2003 Amendment note below.
2001 - Subsec. (f). Pub. L. 107-16, Secs. 302(b)(2), 901,
temporarily substituted "Phaseout of marriage penalty in 15-percent
bracket; adjustments" for "Adjustments" in heading. See Effective
and Termination Dates of 2001 Amendment note below.
Subsec. (f)(2)(A). Pub. L. 107-16, Secs. 302(b)(1), 901,
temporarily inserted "except as provided in paragraph (8)," before
"by increasing". See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (f)(6)(B). Pub. L. 107-16, Secs. 301(c)(1), 901,
temporarily substituted "(other than with respect to sections
63(c)(4) and 151(d)(4)(A)) shall be applied" for "(other than with
respect to subsection (c)(4) of section 63 (as it applies to
subsections (c)(5)(A) and (f) of such section) and section
151(d)(4)(A)) shall be applied". See Effective and Termination
Dates of 2001 Amendment note below.
Subsec. (f)(8). Pub. L. 107-16, Secs. 302(a), 901, temporarily
added par. (8). See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (g)(7)(B)(ii)(II). Pub. L. 107-16, Secs. 101(c)(1), 901,
which directed amendment of subcl. (II) by temporarily substituting
"10 percent." for "15 percent", was executed by temporarily
substituting "10 percent" for "15 percent", to reflect the probable
intent of Congress. See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (h)(1)(A)(ii)(I), (B)(i). Pub. L. 107-16, Secs.
101(c)(2)(A), 901, temporarily substituted "25 percent" for "28
percent". See Effective and Termination Dates of 2001 Amendment
note below.
Subsec. (h)(13). Pub. L. 107-16, Secs. 101(c)(2)(B), 901,
temporarily struck out par. (13), which set out special rules for
determination of 28-percent rate gain, unrecaptured section 1250
gain, pass-thru entities, and charitable remainder trusts. See
Effective and Termination Dates of 2001 Amendment note below.
Subsec. (i). Pub. L. 107-16, Secs. 101(a), 901, temporarily added
subsec. (i). See Effective and Termination Dates of 2001 Amendment
note below.
2000 - Subsec.(h)(8). Pub. L. 106-554 substituted "means the
excess of - " and subpars. (A) and (B) for "means an amount equal
to the gain excluded from gross income under section 1202(a)."
1998 - Subsec. (g)(3)(C), (D). Pub. L. 105-206, Sec. 6007(f)(1),
redesignated subpar. (D) as (C) and struck out heading and text of
former subpar. (C). Text read as follows: "If tax is imposed under
section 644(a)(1) with respect to the sale or exchange of any
property of which the parent was the transferor, for purposes of
applying subparagraph (A) to the taxable year of the parent in
which such sale or exchange occurs -
"(i) taxable income of the parent shall be increased by the
amount treated as included in gross income under section
644(a)(2)(A)(i), and
"(ii) the amount described in subparagraph (A)(ii) shall be
increased by the amount of the excess referred to in section
644(a)(2)(A)."
Subsec. (h). Pub. L. 105-206, Sec. 6005(d)(1), reenacted subsec.
heading without change and amended text of subsec. (h) generally,
substituting present provisions comprising pars. (1) to (13) for
former similar provisions comprising pars. (1) to (11).
Subsec. (h)(5). Pub. L. 105-206, Sec. 5001(a)(1), amended par.
(5) generally. Prior to amendment, par. (5) read as follows:
"(5) 28-percent rate gain. - For purposes of this subsection -
"(A) In general. - The term '28-percent rate gain' means the
excess (if any) of -
"(i) the sum of -
"(I) the aggregate long-term capital gain from property
held for more than 1 year but not more than 18 months;
"(II) collectibles gain; and
"(III) section 1202 gain, over
"(ii) the sum of -
"(I) the aggregate long-term capital loss (not described in
subclause (IV)) from property referred to in clause (i)(I);
"(II) collectibles loss;
"(III) the net short-term capital loss; and
"(IV) the amount of long-term capital loss carried under
section 1212(b)(1)(B) to the taxable year.
"(B) Special rules. -
"(i) Short sale gains and holding periods. - Rules similar to
the rules of section 1233(b) shall apply where the
substantially identical property has been held more than 1 year
but not more than 18 months; except that, for purposes of such
rules -
"(I) section 1233(b)(1) shall be applied by substituting
'18 months' for '1 year' each place it appears; and
"(II) the holding period of such property shall be treated
as being 1 year on the day before the earlier of the date of
the closing of the short sale or the date such property is
disposed of.
"(ii) Long-term losses. - Section 1233(d) shall be applied
separately by substituting '18 months' for '1 year' each place
it appears.
"(iii) Options. - A rule similar to the rule of section
1092(f) shall apply where the stock was held for more than 18
months.
"(iv) Section 1256 contracts. - Amounts treated as long-term
capital gain or loss under section 1256(a)(3) shall be treated
as attributable to property held for more than 18 months."
Subsec. (h)(6)(A). Pub. L. 105-206, Sec. 5001(a)(2), substituted
"1 year" for "18 months".
Subsec. (h)(7)(A)(i), (ii). Pub. L. 105-206, Sec. 5001(a)(3),
amended cls. (i) and (ii) generally. Prior to amendment, cls. (i)
and (ii) read as follows:
"(i) the amount of long-term capital gain (not otherwise treated
as ordinary income) which would be treated as ordinary income if -
"(I) section 1250(b)(1) included all depreciation and the
applicable percentage under section 1250(a) were 100 percent, and
"(II) only gain from property held for more than 18 months were
taken into account, over
"(ii) the excess (if any) of -
"(I) the amount described in paragraph (5)(A)(ii), over
"(II) the amount described in paragraph (5)(A)(i)."
Subsec. (h)(13). Pub. L. 105-206, Sec. 5001(a)(4), struck out
"for periods during 1997" after "Special rules" in par. heading and
amended headings and text of subpars. (A) and (B) generally. Prior
to amendment, subpars. (A) and (B) read as follows:
"(A) Determination of 28-percent rate gain. - In applying
paragraph (5) -
"(i) the amount determined under subclause (I) of paragraph
(5)(A)(i) shall include long-term capital gain (not otherwise
described in paragraph (5)(A)(i)) which is properly taken into
account for the portion of the taxable year before May 7, 1997;
"(ii) the amounts determined under subclause (I) of paragraph
(5)(A)(ii) shall include long-term capital loss (not otherwise
described in paragraph (5)(A)(ii)) which is properly taken into
account for the portion of the taxable year before May 7, 1997;
and
"(iii) clauses (i)(I) and (ii)(I) of paragraph (5)(A) shall be
applied by not taking into account any gain and loss on property
held for more than 1 year but not more than 18 months which is
properly taken into account for the portion of the taxable year
after May 6, 1997, and before July 29, 1997.
"(B) Other special rules. -
"(i) Determination of unrecaptured section 1250 gain not to
include pre-may 7, 1997 gain. - The amount determined under
paragraph (7)(A)(i) shall not include gain properly taken into
account for the portion of the taxable year before May 7, 1997.
"(ii) Other transitional rules for 18-month holding period. -
Paragraphs (6)(A) and (7)(A)(i)(II) shall be applied by
substituting '1 year' for '18 months' with respect to gain
properly taken into account for the portion of the taxable year
after May 6, 1997, and before July 29, 1997."
Subsec. (h)(13)(B). Pub. L. 105-277, Sec. 4002(i)(1), substituted
"paragraph (7)(A)(i)" for "paragraph (7)(A)" in introductory
provisions.
Subsec. (h)(13)(D). Pub. L. 105-277, Sec. 4002(i)(3), added
subpar. (D).
1997 - Subsec. (h). Pub. L. 105-34 amended heading and text of
subsec. (h) generally. Prior to amendment, text read as follows:
"If a taxpayer has a net capital gain for any taxable year, then
the tax imposed by this section shall not exceed the sum of -
"(1) a tax computed at the rates and in the same manner as if
this subsection had not been enacted on the greater of -
"(A) taxable income reduced by the amount of the net capital
gain, or
"(B) the amount of taxable income taxed at a rate below 28
percent, plus
"(2) a tax of 28 percent of the amount of taxable income in
excess of the amount determined under paragraph (1).
For purposes of the preceding sentence, the net capital gain for
any taxable year shall be reduced (but not below zero) by the
amount which the taxpayer elects to take into account as investment
income for the taxable year under section 163(d)(4)(B)(iii)."
1996 - Subsec. (g)(7)(A)(ii). Pub. L. 104-188, Sec. 1704(m)(1),
amended cl. (ii) generally. Prior to amendment, cl. (ii) read as
follows: "such gross income is more than $500 and less than
$5,000,".
Subsec. (g)(7)(B)(i). Pub. L. 104-188, Sec. 1704(m)(2)(A),
substituted "twice the amount described in paragraph (4)(A)(ii)(I)"
for "$1,000".
Subsec. (g)(7)(B)(ii)(II). Pub. L. 104-188, Sec. 1704(m)(2)(B),
amended subcl. (II) generally. Prior to amendment, subcl. (II) read
as follows: "for each such child, the lesser of $75 or 15 percent
of the excess of the gross income of such child over $500, and".
1993 - Subsecs. (a) to (e). Pub. L. 103-66, Secs. 13201(a),
13202(a), amended subsecs. (a) to (e) generally, substituting
five-tiered tax tables for all categories applicable to tax years
after December 31, 1992, for prior three-tiered tax tables.
Subsec. (f)(1). Pub. L. 103-66, Sec. 13201(b)(3)(A)(i),
substituted "1993" for "1990".
Subsec. (f)(3)(B). Pub. L. 103-66, Sec. 13201(b)(3)(A)(ii),
substituted "1992" for "1989".
Subsec. (f)(7). Pub. L. 103-66, Sec. 13201(b)(3)(B), added par.
(7).
Subsec. (h). Pub. L. 103-66, Sec. 13206(d)(2), inserted as
concluding provision at end "For purposes of the preceding
sentence, the net capital gain for any taxable year shall be
reduced (but not below zero) by the amount which the taxpayer
elects to take into account as investment income for the taxable
year under section 163(d)(4)(B)(iii)."
1990 - Subsecs. (a) to (e). Pub. L. 101-508, Sec. 11101(a),
amended subsecs. (a) to (e) generally, substituting three-tiered
tax tables for all categories applicable to tax years after Dec.
31, 1990, for prior two-tiered tax tables.
Subsec. (f)(1). Pub. L. 101-508, Sec. 11101(d)(1)(A)(i),
substituted "1990" for "1988".
Subsec. (f)(3)(B). Pub. L. 101-508, Sec. 11101(d)(1)(A)(ii),
substituted "1989" for "1987".
Subsec. (f)(6)(A). Pub. L. 101-508, Sec. 11104(b)(1), substituted
"section 151(d)(4)" for "section 151(d)(3)".
Pub. L. 101-508, Sec. 11103(c), inserted reference to section
68(b)(2).
Pub. L. 101-508, Sec. 11101(b)(2), struck out "subsection
(g)(4)," after "paragraph (2)(A),".
Subsec. (f)(6)(B). Pub. L. 101-508, Sec. 11104(b)(2), substituted
"section 151(d)(4)(A)" for "section 151(d)(3)".
Subsec. (g). Pub. L. 101-508, Sec. 11101(d)(2), redesignated
subsec. (i) as (g).
Pub. L. 101-508, Sec. 11101(b)(1), struck out subsec. (g) which
provided for phaseout of 15-percent rate and personal exemptions.
Subsec. (h). Pub. L. 101-508, Sec. 11101(d)(2), redesignated
subsec. (j) as (h) and struck out former subsec. (h) which provided
tax schedules for taxable years beginning in 1987.
Subsec. (i). Pub. L. 101-508, Sec. 11101(d)(2), redesignated
subsec. (i) as (g).
Subsec. (j). Pub. L. 101-508, Sec. 11101(d)(2), redesignated
subsec. (j) as (h).
Pub. L. 101-508, Sec. 11101(c), amended subsec. (j) generally.
Prior to amendment, subsec. (j) read as follows:
"(1) In general. - If a taxpayer has a net capital gain for any
taxable year to which this subsection applies, then the tax imposed
by this section shall not exceed the sum of -
"(A) a tax computed at the rates and in the same manner as if
this subsection had not been enacted on the greater of -
"(i) the taxable income reduced by the amount of net capital
gain, or
"(ii) the amount of taxable income taxed at a rate below 28
percent, plus
"(B) a tax of 28 percent of the amount of taxable income in
excess of the amount determined under subparagraph (A), plus
"(C) the amount of increase determined under subsection (g).
"(2) Years to which subsection applies. - This subsection shall
apply to -
"(A) any taxable year beginning in 1987, and
"(B) any taxable year beginning after 1987 if the highest rate
of tax set forth in subsection (a), (b), (c), (d), or (e)
(whichever applies) for such taxable year exceeds 28 percent."
1989 - Subsec. (f)(6)(B). Pub. L. 101-239, Sec. 7831(a),
substituted "subsection (c)(4) of section 63 (as it applies to
subsections (c)(5)(A) and (f) of such section) and section
151(d)(3)" for "section 63(c)(4)".
Subsec. (i)(3)(C), (D). Pub. L. 101-239, Sec. 7811(j)(1),
redesignated subpar. (C), relating to special rule where parent has
different taxable year, as (D).
Subsec. (i)(7)(A). Pub. L. 101-239, Sec. 7816(b), inserted
"(other than for purposes of this paragraph)" after "shall be
treated" in concluding provisions.
1988 - Subsec. (g)(2). Pub. L. 100-647, Sec. 1001(a)(3), inserted
provision relating to application of subpar. (B) at end of last
sentence.
Subsec. (i)(3)(A). Pub. L. 100-647, Sec. 1014(e)(2), substituted
"any exclusion, deduction, or credit" for "any deduction or
credit".
Subsec. (i)(3)(C). Pub. L. 100-647, Sec. 1014(e)(7), added
subpar. (C) relating to special rule where parent has different
taxable year.
Pub. L. 100-647, Sec. 1014(e)(1), added subpar. (C) relating to
coordination with section 644.
Subsec. (i)(4)(A)(i). Pub. L. 100-647, Sec. 1014(e)(3)(A),
substituted "adjusted gross income" for "gross income" and inserted
"attributable to" after "which is not".
Subsec. (i)(4)(A)(ii)(II). Pub. L. 100-647, Sec.
1014(e)(3)(B)-(D), substituted "his deductions" for "his
deduction", "the itemized deductions allowed" for "the deductions
allowed", and "adjusted gross income" for "gross income".
Subsec. (i)(5)(A). Pub. L. 100-647, Sec. 1014(e)(6), substituted
"custodial parent (within the meaning of section 152(e))" for
"custodial parent".
Subsec. (i)(7). Pub. L. 100-647, Sec. 6006(a), added par. (7).
1986 - Subsecs. (a) to (e). Pub. L. 99-514, Sec. 101(a), in
amending subsecs. (a) to (e) generally, substituted a general tax
table for tax tables (1), (2), and (3) in each subsec. applicable
to taxable years beginning in 1982, 1983, and after 1983,
respectively.
Subsec. (f). Pub. L. 99-514, Sec. 101(a), in amending subsec. (f)
generally, in par. (1) substituted "1988," for "1984" and struck
out "paragraph (3) of" before "subsections", in par. (2) struck out
"paragraph (3) of" before "subsection" in introductory provisions,
substituted subpars. (A) to (C) for former subpars. (A) to (C)
which read as follows:
"(A) by increasing -
"(i) the maximum dollar amount on which no tax is imposed
under such table, and
"(ii) the minimum and maximum dollar amounts for each rate
bracket for which a tax is imposed under such table,
by the cost-of-living adjustment for such calendar year,
"(B) by not changing the rate applicable to any rate bracket as
adjusted under subparagraph (A)(ii), and
"(C) by adjusting the amounts setting forth the tax to the
extent necessary to reflect the adjustments in the rate
brackets.",
and struck out concluding provisions which read as follows: "If any
increase determined under subparagraph (A) is not a multiple of
$10, such increase shall be rounded to the nearest multiple of $10
(or if such increase is a multiple of $5, such increase shall be
increased to the next highest multiple of $10).", in par. (3)(B)
substituted "1987" for "1983", in par. (4) substituted "August 31"
for "September 30", in par. (5) inserted requirement that the
Consumer Price Index most consistent with such Index for calendar
year 1986 be used, and added par. (6).
Subsecs. (g), (h). Pub. L. 99-514, Sec. 101(a), in amending
section generally, added subsecs. (g) and (h).
Subsec. (i). Pub. L. 99-514, Sec. 1411(a), added subsec. (i).
Subsec. (j). Pub. L. 99-514, Sec. 302(a), added subsec. (j).
1982 - Subsecs. (d), (e). Pub. L. 97-448, Sec. 101(a)(3), set out
as a note below, provided for amendment of the tables applying to
married individuals filing separately or to estates and trusts so
as to correct any figure differing by not more than 50 cents from
the correct amount under the formula used in constructing such
table. Corrections to the tables in subsecs. (d) and (e) appeared
in Announcement 83-50 contained in Internal Revenue Bulletin No.
1983-12 of Mar. 21, 1983.
1981 - Subsecs. (a) to (e). Pub. L. 97-34, Sec. 101(a), generally
revised tax tables downward providing for cumulative
across-the-board reductions of 23 percent on a three phase schedule
under which different new rates were set for taxable years
beginning in 1982, for taxable years beginning in 1983, and for
taxable years beginning after 1983.
Subsec. (f). Pub. L. 97-34, Sec. 104(a), added subsec. (f).
1978 - Subsec. (a). Pub. L. 95-600 generally made a downward
revision of tax table for married individuals filing joint returns
and surviving spouses resulting in a table under which, among other
changes, a bottom bracket imposing no tax on taxable income of
$3,400 or less was substituted for a bottom bracket imposing no tax
on taxable income of $3,200 or less.
Subsec. (b). Pub. L. 95-600 generally made a downward revision of
tax table for heads of household resulting in a table under which,
among other changes, a bottom bracket imposing no tax on taxable
income of $2,300 or less was substituted for a bottom bracket
imposing no tax on taxable income of $2,200 or less.
Subsec. (c). Pub. L. 95-600 generally made a downward revision of
tax table for unmarried individuals other than surviving spouses
and heads of households resulting in a table under which, among
other changes, a bottom bracket imposing no tax on taxable income
of $2,300 or less was substituted for a bottom bracket imposing no
tax on taxable income of $2,200 or less.
Subsec. (d). Pub. L. 95-600 generally made a downward revision of
tax tables for married individuals filing separate returns
resulting in a table under which, among other changes, a bottom
bracket imposing no tax on taxable income of $1,700 or less was
substituted for a bottom bracket imposing no tax on taxable income
of $1,600 or less.
Subsec. (e). Pub. L. 95-600 generally made a downward revision of
tax tables for estates and trusts resulting in a table under which,
among other changes, a bottom bracket under which a tax of 14% is
imposed on taxable income of $1,050 for a bottom bracket under
which a tax of 14% was imposed on taxable income of $500 or less.
1977 - Subsec. (a). Pub. L. 95-30 generally made a downward
revision of tax table for married individuals filing joint returns
and surviving spouses resulting in a table under which, among other
changes, a bottom bracket imposing no tax on taxable income of
$3,200 or less was substituted for a bottom bracket under which a
tax of 14% had been imposed on a taxable income of $1,000 or less.
Subsec. (b). Pub. L. 95-30 generally made a downward revision of
tax table for heads of households resulting in a table under which,
among other changes, a bottom bracket imposing no tax on taxable
income of $2,200 or less was substituted for a bottom bracket under
which a tax of 14% had been imposed on a taxable income of $1,000
or less.
Subsec. (c). Pub. L. 95-30 generally made a downward revision of
tax table for unmarried individuals other than surviving spouses
and heads of households resulting in a table under which, among
other changes, a bottom bracket imposing no tax on taxable income
of $2,200 or less was substituted for a bottom bracket under which
a tax of 14% had been imposed on a taxable income of $500 or less.
Subsec. (d). Pub. L. 95-30 generally made a downward revision of
tax table for married individuals filing separate returns resulting
in a table under which, among other changes, a bottom bracket
imposing no tax on taxable income of $1,600 or less was substituted
for a bottom bracket under which a tax of 14% had been imposed on a
taxable income of $500 or less. Provisions making table applicable
to estates and trusts were struck out. See subsec. (e).
Subsec. (e). Pub. L. 95-30 added subsec. (e) consisting of table
formerly contained in subsec. (d) but without any downward revision
and limited so as to apply only to estates and trusts.
1969 - Subsec. (a). Pub. L. 91-172 substituted a table of rates
of tax for married individuals filing joint returns and surviving
spouses for the tables of rates of tax on individuals. For rates of
taxes on unmarried individuals and married persons filing separate
returns, see subsecs. (c) and (d) of this section.
Subsec. (b). Pub. L. 91-172 generally revised rates of tax of
heads of household downwards and struck out provisions defining
head of household, determination of status, and limitations. For
definition of head of household, determination of status, and
limitations, see section 2(b) of this title.
Subsec. (c). Pub. L. 91-172 substituted rates of tax on unmarried
individuals (other than surviving spouses and heads of household)
for special rules explaining the rates of tax imposed under former
subsecs. (a) and (b)(1) and prescribing a maximum limit of 87
percent of the taxable year.
Subsec. (d). Pub. L. 91-172 substituted a table of rates of tax
for married individuals filing separate returns for provision
prescribing the applicability of the rates to non-resident aliens.
For applicability of rates of tax to non-resident aliens, see
section 2(d) of this title.
Subsec. (e). Pub. L. 91-172 struck out cross reference to section
63. See section 2(e) of this title.
1966 - Subsecs. (d), (e). Pub. L. 89-809 added subsec. (d) and
redesignated former subsec. (d) as (e).
1964 - Pub. L. 88-272 amended section generally by splitting the
former first bracket which started at $2,000 into four new
brackets, the 14 percent bracket representing a 30 percent
reduction, the 15 percent bracket a 25 percent cut, and the 16
percent bracket a 20 percent cut, and reducing all other brackets
by cuts averaging about 20 percent and effectuated these cuts in
two steps, one in 1964, and one in 1965.
EFFECTIVE AND TERMINATION DATES OF 2003 AMENDMENT
Pub. L. 108-27, title I, Sec. 102(c), May 28, 2003, 117 Stat.
754, provided that: "The amendments made by this section [amending
this section and provisions set out as a note under this section]
shall apply to taxable years beginning after December 31, 2002."
Pub. L. 108-27, title I, Sec. 104(c), May 28, 2003, 117 Stat.
755, provided that:
"(1) In general. - The amendments made by this section [amending
this section] shall apply to taxable years beginning after December
31, 2002.
"(2) Tables for 2003. - The Secretary of the Treasury shall
modify each table which has been prescribed under section 1(f) of
the Internal Revenue Code of 1986 for taxable years beginning in
2003 and which relates to the amendment made by subsection (a) to
reflect such amendment."
Pub. L. 108-27, title I, Sec. 105(b), May 28, 2003, 117 Stat.
755, provided that: "The amendment made by this section [amending
this section] shall apply to taxable years beginning after December
31, 2002."
Pub. L. 108-27, title I, Sec. 107, May 28, 2003, 117 Stat. 755,
provided that: "Each amendment made by this title [enacting section
6429 of this title, amending this section and sections 24, 55, and
63 of this title, and amending provisions set out as notes under
this section] shall be subject to title IX of the Economic Growth
and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, Sec.
901, set out as an Effective and Termination Dates of 2001
Amendment note below] to the same extent and in the same manner as
the provision of such Act to which such amendment relates."
Pub. L. 108-27, title III, Sec. 301(d), May 28, 2003, 117 Stat.
760, provided that:
"(1) In general. - Except as otherwise provided by this
subsection, the amendments made by this section [amending this
section, sections 55, 57, 1445, and 7518 of this title, and section
1177 of Title 46, Appendix, Shipping] shall apply to taxable years
ending on or after May 6, 2003.
"(2) Withholding. - The amendment made by subsection (a)(2)(C)
[amending section 1445 of this title] shall apply to amounts paid
after the date of the enactment of this Act [May 28, 2003].
"(3) Small business stock. - The amendments made by subsection
(b)(3) [amending section 57 of this title] shall apply to
dispositions on or after May 6, 2003."
Pub. L. 108-27, title III, Sec. 302(f), May 28, 2003, 117 Stat.
764, provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and sections
163, 301, 306, 338, 467, 531, 541, 584, 702, 854, 857, 1255, and
1257 of this title and repealing section 341 of this title] shall
apply to taxable years beginning after December 31, 2002.
"(2) Regulated investment companies and real estate investment
trusts. - In the case of a regulated investment company or a real
estate investment trust, the amendments made by this section shall
apply to taxable years ending after December 31, 2002; except that
dividends received by such a company or trust on or before such
date shall not be treated as qualified dividend income (as defined
in section 1(h)(11)(B) of the Internal Revenue Code of 1986, as
added by this Act)."
Pub. L. 108-27, title III, Sec. 303, May 28, 2003, 117 Stat. 764,
provided that: "All provisions of, and amendments made by, this
title [amending this section, sections 55, 57, 163, 301, 306, 338,
467, 531, 541, 584, 702, 854, 857, 1255, 1257, 1445, and 7518 of
this title, and section 1177 of Title 46, Appendix, Shipping,
repealing section 341 of this title, and enacting provisions set
out as notes under this section] shall not apply to taxable years
beginning after December 31, 2008, and the Internal Revenue Code of
1986 shall be applied and administered to such years as if such
provisions and amendments had never been enacted."
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Pub. L. 107-16, title I, Sec. 101(d), June 7, 2001, 115 Stat. 44,
provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [enacting section 6428 of this
title and amending this section and sections 15, 531, 541, 3402,
and 3406 of this title] shall apply to taxable years beginning
after December 31, 2000.
"(2) Amendments to withholding provisions. - The amendments made
by paragraphs (6), (7), (8), (9), (10), and (11) of subsection (c)
[amending sections 3402 and 3406 of this title] shall apply to
amounts paid after the 60th day after the date of the enactment of
this Act [June 7, 2001]. References to income brackets and rates of
tax in such paragraphs shall be applied without regard to section
1(i)(1)(D) of the Internal Revenue Code of 1986."
Pub. L. 107-16, title III, Sec. 301(d), June 7, 2001, 115 Stat.
54, as amended by Pub. L. 108-27, title I, Sec. 103(b), May 28,
2003, 117 Stat. 754, provided that: "The amendments made by this
section [amending this section and section 63 of this title] shall
apply to taxable years beginning after December 31, 2002."
Pub. L. 107-16, title III, Sec. 302(c), June 7, 2001, 115 Stat.
54, as amended by Pub. L. 108-27, title I, Sec. 102(b)(2), May 28,
2003, 117 Stat. 754, provided that: "The amendments made by this
section [amending this section] shall apply to taxable years
beginning after December 31, 2002."
Pub. L. 107-16, title IX, Sec. 901, June 7, 2001, 115 Stat. 150,
as amended by Pub. L. 107-358, Sec. 2, Dec. 17, 2002, 116 Stat.
3015, provided that:
"(a) In General. - All provisions of, and amendments made by,
this Act [see Tables for classification] shall not apply -
"(1) to taxable, plan, or limitation years beginning after
December 31, 2010, or
"(2) in the case of title V [see Tables for classification], to
estates of decedents dying, gifts made, or generation skipping
transfers, after December 31, 2010.
"(b) Application of Certain Laws. - The Internal Revenue Code of
1986 and the Employee Retirement Income Security Act of 1974 [29
U.S.C. 1001 et seq.] shall be applied and administered to years,
estates, gifts, and transfers described in subsection (a) as if the
provisions and amendments described in subsection (a) had never
been enacted."
"(c) Exception. - Subsection (a) shall not apply to section 803
[set out as a note preceding section 101 of this title] (relating
to no federal income tax on restitution received by victims of the
Nazi regime or their heirs or estates)."
EFFECTIVE DATE OF 2000 AMENDMENT
Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 117(c)], Dec. 21,
2000, 114 Stat. 2763, 2763A-605, provided that: "The amendments
made by this section [amending this section and section 1202 of
this title] shall apply to stock acquired after the date of the
enactment of this Act [Dec. 21, 2000]."
EFFECTIVE DATE OF 1998 AMENDMENTS
Pub. L. 105-277, div. J, title IV, Sec. 4002(k), Oct. 21, 1998,
112 Stat. 2681-908, provided that: "The amendments made by this
section [amending this section and sections 408A, 6015, 6103, 6159,
7421, 7443A, and 7491 of this title and amending provisions set out
as a note under section 6601 of this title] shall take effect as if
included in the provisions of the 1998 Act [Pub. L. 105-206] to
which they relate."
Pub. L. 105-206, title V, Sec. 5001(b), July 22, 1998, 112 Stat.
788, provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and sections
1223 and 1235 of this title] shall apply to taxable years ending
after December 31, 1997.
"(2) Subsection (a)(5). - The amendments made by subsection
(a)(5) [amending sections 1223 and 1235 of this title] shall take
effect on January 1, 1998."
Pub. L. 105-206, title VI, Sec. 6024, July 22, 1998, 112 Stat.
826, provided that: "Except as otherwise provided in this title
[see Tables for classification], the amendments made by this title
shall take effect as if included in the provisions of the Taxpayer
Relief Act of 1997 [Pub. L. 105-34] to which they relate."
EFFECTIVE DATE OF 1997 AMENDMENT
Section 311(d) of Pub. L. 105-34 provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section, sections
55, 57, 904, 1445, and 7518 of this title, and section 1177 of
Title 46, Appendix, Shipping] shall apply to taxable years ending
after May 6, 1997.
"(2) Withholding. - The amendment made by subsection (c)(1)
[amending section 1445 of this title] shall apply only to amounts
paid after the date of the enactment of this Act [Aug. 5, 1997]."
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1704(m)(4) of Pub. L. 104-188 provided that: "The
amendments made by this subsection [amending this section and
section 59 of this title] shall apply to taxable years beginning
after December 31, 1995."
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13201(c) of Pub. L. 103-66 provided that: "The amendments
made by this section [amending this section and sections 41, 63,
68, 132, 151, 453A, 513, 531, and 541 of this title] shall apply to
taxable years beginning after December 31, 1992."
Section 13202(c) of Pub. L. 103-66 provided that: "The amendments
made by this section [amending this section and sections 531 and
541 of this title] shall apply to taxable years beginning after
December 31, 1992."
Section 13206(d)(3) of Pub. L. 103-66 provided that: "The
amendments made by this subsection [amending this section and
section 163 of this title] shall apply to taxable years beginning
after December 31, 1992."
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11101(e) of Pub. L. 101-508 provided that: "The
amendments made by this section [amending this section, sections
32, 41, 59, 63, 135, 151, 513, 691, 904, 6103, and 7518 of this
title, and section 1177 of Title 46, Appendix, Shipping] shall
apply to taxable years beginning after December 31, 1990."
Section 11103(e) of Pub. L. 101-508 provided that: "The
amendments made by this section [enacting section 68 of this title
and amending this section and section 56 of this title] shall apply
to taxable years beginning after December 31, 1990."
Section 11104(c) of Pub. L. 101-508 provided that: "The
amendments made by this section [amending this section and section
151 of this title] shall apply to taxable years beginning after
December 31, 1990."
EFFECTIVE DATE OF 1989 AMENDMENT
Section 7817 of Pub. L. 101-239 provided that: "Except as
otherwise provided in this part [part I (Secs. 7811-7817) of
subtitle H of title VII of Pub. L. 101-239, see Tables for
classification], any amendment made by this part shall take effect
as if included in the provision of the 1988 Act [Pub. L. 100-647]
to which such amendment relates."
Section 7831(g) of Pub. L. 101-239 provided that: "Any amendment
made by this section [amending this section and sections 42, 406,
407, and 1250 of this title and provisions set out as notes under
sections 141 and 263A of this title] shall take effect as if
included in the provision of the Tax Reform Act of 1986 [Pub. L.
99-514] to which such amendment relates."
EFFECTIVE DATE OF 1988 AMENDMENT
Section 1019 of title I of Pub. L. 100-647 provided that:
"(a) General Rule. - Except as otherwise provided in this title,
any amendment made by this title [see Tables for classification],
shall take effect as if included in the provision of the Reform Act
[Pub. L. 99-514] to which such amendment relates.
"(b) Waiver of Estimated Tax Penalties. - No addition to tax
shall be made under section 6654 or 6655 of the 1986 Code for any
period before April 16, 1989 (March 16, 1989 in the case of a
taxpayer subject to section 6655 of the 1986 Code) with respect to
any underpayment to the extent such underpayment was created or
increased by any provision of this title or title II [see Tables
for classification]."
Section 6006(b) of Pub. L. 100-647 provided that: "The amendment
made by this section [amending this section] shall apply to taxable
years beginning after December 31, 1988."
EFFECTIVE DATE OF 1986 AMENDMENT
Section 151 of title I of Pub. L. 99-514 provided that:
"(a) General Rule. - Except as otherwise provided in this
section, the amendments made by this title [enacting section 67 of
this title, amending this section, sections 3, 5, 15, 21, 32, 62,
63, 74, 85, 86, 102, 108, 117, 129, 151, 152, 164, 170, 172, 183,
213, 265, 274, 280A, 402, 441, 443, 527, 541, 613A, 642, 667, 861,
862, 901, 904, 1398, 1441, 2032A, 3121, 3231, 3306, 3401, 3402,
3507, 4941, 4945, 6012 to 6014, 6212, 6504, 6511, and 7871 of this
title, and section 409 of Title 42, The Public Health and Welfare,
renumbering section 223 of this title as section 220 of this title,
repealing sections 24, 221, 222, and 1301 to 1305 of this title,
and enacting provisions set out as a note under section 32 of this
title] shall apply to taxable years beginning after December 31,
1986.
"(b) Unemployment Compensation. - The amendment made by section
121 [amending section 85 of this title] shall apply to amounts
received after December 31, 1986, in taxable years ending after
such date.
"(c) Prizes and Awards. - The amendments made by section 122
[amending sections 74, 102, 274, 3121, 3231, 3306, 3401, 4941, and
4945 of this title and section 409 of Title 42, The Public Health
and Welfare] shall apply to prizes and awards granted after
December 31, 1986.
"(d) Scholarships. - The amendments made by section 123 [amending
sections 74, 117, 1441, and 7871 of this title] shall apply to
taxable years beginning after December 31, 1986, but only in the
case of scholarships and fellowships granted after August 16, 1986.
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