CCH Logo
Contact Us | CCH Online Store | Site Map    

  
navigation tabnavigation tab Home 
navigation tabnavigation tab About Us 
navigation tabnavigation tab Order Products 
navigation tabnavigation tab Press Center 
navigation tabnavigation tab Customer Service 
navigation tabnavigation tab Career Opportunities 
navigation tab
   HomePress CenterPress Releases
 
Press Releases
List By Date
Banking/Finance Institutions
Business Law
Corporate
Health Care and Entitlements
Human Resources
Securities
Tax
News Archives
 

Contact Information

Leslie Bonacum
847-267-7153
mediahelp@cch.com
Neil Allen
847-267-2179
neil.allen@wolterskluwer.com

Indexing Provides Some Tax Relief: CCH Releases Tax Projections For 2003

(RIVERWOODS, ILL., September 19, 2002) – Indexing for inflation will bring some tax relief next year to those currently in the 27-percent and higher tax brackets, according to CCH INCORPORATED (CCH), a leading provider of tax law information and software, which today released estimated income ranges for each 2003 tax bracket.

Two examples show the tax savings:

    • A married couple filing jointly with total taxable income of $100,000 could pay $90 less in income taxes in 2003.
    • A single filer with taxable income of $50,000 will contribute $54 less next year.

Inflation Adjustments

For more than a decade, the U.S. tax code has required that federal income tax brackets and certain other figures be adjusted for inflation annually.

The adjustment is based on Consumer Price Index figures for September through August immediately prior to the adjusted year. CCH’s projections are based on the relevant inflation data released September 18, 2002, by the U.S. Department of Labor.

Annual inflation adjustments have been inserted into the Internal Revenue Code in recent years with increasing frequency. Aside from the 40 separate computations needed to inflation-adjust the tax bracket tables each year, the Code now requires over 50 other inflation-driven computations to determine deduction, exemption and exclusion amounts.

The IRS usually releases official numbers in December each year. CCH tax bracket projections are provided for illustrative purposes only, and should not be used for income tax returns or other federal income tax related purposes until confirmed by the IRS later this year.

Some Items Not Indexed

George Jones, JD, LLM, senior federal tax analyst for CCH, observed that some items in the Code are not indexed for inflation, notably the new 10-percent bracket.

"This new lowest bracket applies to the first $6,000 of income for singles, $10,000 for heads of households and $12,000 for joint filers, regardless of inflation, from now until 2007. Then it will be raised by $1,000 for singles and $2,000 for joint filers, but it won’t be indexed until 2009," Jones said.

Indexing of brackets lowers tax bills by including more of people’s incomes in lower brackets – in the 15-percent rather than the 27-percent bracket, for example.

"This means that inflation adjustments to the brackets provides no relief for those already in the lowest two brackets," Jones added.

Adjustments Add Up Over Time

Even so, according to Jones, for many people, the size of the "tax cut" generated over the past several years by these inflation-factor increases is substantial.

"In 1997, the 15-percent bracket ended at $41,200 for joint filers, while for 2003, the amount covered by the top of the 15-percent bracket has increased to $47,450. That’s a $750 ‘tax cut’ per taxpayer at the top of the 2003 15-percent bracket, using current tax rates," said Jones

Standard Deduction, Personal Exemption Also Rise

Adjusted for inflation, the standard deduction and personal exemption amounts are projected to increase as well for 2003. These increases can produce lower taxes by lowering the taxpayer’s taxable income

    • Married couples filing jointly will see a projected $100 increase in their standard deduction, to $7,950.
    • Single taxpayers could see a $50 increase over 2002 in their standard deduction, to $4,750.
    • The additional standard deduction for those age 65 or older or who are blind increases $50 to $950 for married individuals and surviving spouses. It remains unchanged for single filers at $1,150.
    • The personal exemption amount will go up in 2003 by $50 to $3,050.

Here, too, the inflation adjustments add up over time. For example, since 1988, the standard deduction for married taxpayers filing joint returns has grown through inflation by more than 50 percent, from $5,000 to the anticipated $7,950 amount for 2003.

Taxpayers can, however, lose much of the value of personal exemptions and itemized deductions when their incomes rise above certain levels. Those "phaseout" levels are also adjusted for inflation. For 2003, married couples filing jointly will begin to loose some of the value of any itemized deductions when their adjusted gross income exceeds $139,500. They will begin to lose some of the value of their personal exemptions when their adjusted gross income exceeds $209,250.

For a complete look at how income ranges for each tax bracket are projected to shift next year, see the attached CCH chart.

No Change to "Kiddie" Deduction, Gift Tax Exemption

In general, inflation adjustments are rounded to the next-lower multiple of $50, so if the adjustment produces an increase of less than $50, no increase is made. The "kiddie" standard deduction, used on the returns of children who are claimed as dependents on their parents’ returns last increased in 2001, from $700 to $750.

The tax code only allows the gift tax exemption to rise when the inflation adjustment would produce an increase of $1,000 or more. That happened last year, when the exemption increased from $10,000 to its current $11,000. This year’s inflation figures don’t support a further increase, so the exemption will remain unchanged for 2003.

One tax amount will no longer undergo any computation for inflation starting in 2003, because the entire tax has been eliminated. The luxury auto tax, which has been imposed at 3 percent on vehicle costs over $40,000 in 2002, is eliminated entirely starting in 2003.

About CCH INCORPORATED

CCH INCORPORATED, headquartered in Riverwoods, Ill., was founded in 1913 and has served four generations of business professionals and their clients. The company produces more than 700 electronic and print products for the tax, legal, securities, insurance, human resources, health care and small business markets. CCH is a wholly owned subsidiary of Wolters Kluwer North America. The CCH web site can be accessed at cch.com. The CCH tax and accounting web site can be accessed at tax.cchgroup.com.

CCH INCORPORATED’s 2003 TAX PROJECTIONS1

Married Filing Jointly
(& Surviving Spouse)

2003 Taxable Income Tax Rate 2002 Taxable Income Tax Rate

$0-$12,000

10%

$0-$12,000

10%

$12,000-$47,450

15%

$12,000-$46,700

15%

$47,450-$114,650

27%

$46,700-$112,850

27%

$114,650-$174,700

30%

$112,850-$171,950

30%

$174,700-$311,950

35%

$171,950-$307,050

35%

$311,950

38.6%

over $307,050

38.6%

Married Filing Separately

2003 Taxable Income Tax Rate 2002 Taxable Income Tax Rate

$0-$6,000

10%

$0-$6,000

10%

$6,000-$23,725

15%

$6,000-$23,350

15%

$23,725-$57,325

27%

$23,350-$56,425

27%

$57,325-$87,350

30%

$56,425-$85,975

30%

$87,350-155,975

35%

$85,975-$153,525

35%

$155,975

38.6%

over $153,525

38.6%

Single Filers

2003 Taxable Income Tax Rate 2002 Taxable Income Tax Rate

$0-$6,000

10%

$0-$6,000

10%

$6,000-$28,400

15%

$6,000-$27,950

15%

$28,400-$68,800

27%

$27,950-$67,700

27%

$68,800-$143,500

30%

$67,700-$141,250

30%

$143,500-311,950

35%

$141,250-$307,050

35%

$311,950

38.6%

over $307,050

38.6%

Head of Household

2003 Taxable Income Tax Rate 2002 Taxable Income Tax Rate

$0-$10,000

10%

$0-$10,000

10%

$10,000-$38,050

15%

$10,000-$37,450

15%

$38,050-$98,250

27%

$37,450-$96,700

27%

$98,250-$159,100

30%

$96,700-$156,600

30%

$159,100-$311,950

35%

$156,600-$307,050

35%

$311,950

38.6%

over $307,050

38.6%

Standard Deduction Amounts

Filing Status 2003 2002 Increase
Married Filing Jointly& (Surviving Spouse) $7,950 $7,850 $100
Married Filing Separately $3,975 $3,925 $ 50
Single $4,750 $4,700 $ 50
Head of Household $7,000 $6,900 $100

  Standard Deduction for Dependents ("Kiddie" Standard Deduction)

2003 2002 Increase
$750 $750 $0


Income Level At Which 3-Percent Itemized
Deduction Limitation Takes Effect
(Adjusted Gross Income)

Filing Status 2003 2002 Increase
Married Filing Jointly
(& Surviving Spouse)
$139,500 $137,300  $2,200
Married Filing Separately $ 69,750 $ 68,650 $1,100
Single $139,500  $137,300 $2,200
Head of Household $139,500 $137,300 $2,200

  Personal Exemption Amounts

2003  2002 Increase
$3,050 $3,000  $50

Threshold for Personal Exemption Phaseout

Filing Status 2003 2002  Increase
Married Filing Jointly
(& Surviving Spouse)
$209,250 $206,000 $3,250
Married Filing Separately $104,625 $103,000 $1,625
Single $139,500 $137,300 $2,200
Head of Household  $174,400 $171,650 $2,750
Gift Tax Exemption

2003 2002  Increase
$11,000 $11,000 $0


1.) These numbers are projected for the 2003 tax year and have not been confirmed by the Internal Revenue Service.

-- ### --

nb-02-102

       


   © 2018, CCH INCORPORATED. All rights reserved.   

  Back to Top | Print this Page   
spacer