Code Section 63
| Code Section | Effective Date | Name of Act | Name of Provision | 10yr Revenue Estimate ($millions) |
|---|---|---|---|---|
| 1, 32, and 63 | 12/31/2010 | The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 | Marriage Penalty Relief and Earned Income Tax Credit Simplification | -26,872 |
| 63 and 164 | Between 2/17/2009 and 1/1/2010 | The American Recovery and Reinvestment Act of 2009 (Public Law 111-5) | Deduction for State sales tax and excise tax on the purchase of qualified motor vehicles | -1,684 |
Marriage Penalty Relief and Earned Income Tax Credit Simplification
Explanation of Provision
Basic standard deduction
The provision increases the basic standard deduction for a married couple filing a joint return to twice the basic standard deduction for an unmarried individual filing a single return for two years (through 2012).
Fifteen percent rate bracket
The provision increases the size of the 15-percent regular income tax rate bracket for a married couple filing a joint return to twice the 15-percent regular income tax rate bracket for an unmarried individual filing a single return for two years (through 2012).
Earned income tax credit
The provision extends certain EITC provisions adopted by EGTRRA for two years (through 2012). These include: (1) a simplified definition of earned income; (2) a simplified relationship test; (3) use of AGI instead of modified AGI; (4) a simplified tiebreaking rule; (5) additional math error authority for the Internal Revenue Service; (6) a repeal of the prior-law provision that reduced an individual’s EITC by the amount of his alternative minimum tax liability; and (7) increases in the beginning and ending points of the credit phase-out for married taxpayers by $5,000.1530
Deduction for State sales tax and excise tax on the purchase of qualified motor vehicles
Explanation of Provision
The Act provides a deduction for qualified motor vehicle taxes. It expands the definition of taxes allowed as a deduction to include qualified motor vehicle taxes paid or accrued within the taxable year. A taxpayer who itemizes and makes an election to deduct State and local sales taxes, including for qualified motor vehicles, in lieu of State and local income taxes for the taxable year shall not be allowed an additional deduction for qualified motor vehicle taxes. A taxpayer who does not itemize deductions is allowed an increased standard deduction for qualified motor vehicle taxes.
Qualified motor vehicle taxes include any State or local sales or excise tax imposed on the purchase of a qualified motor vehicle. A qualified motor vehicle means a passenger automobile, light truck, or motorcycle which has a gross vehicle weight rating of not more than 8,500 pounds, or a motor home acquired for use by the taxpayer after the date of enactment and before January 1, 2010, the original use of which commences with the taxpayer.
The deduction is limited to the tax on up to $49,500 of the purchase price of a qualified motor vehicle. The deduction is phased out for taxpayers with modified adjusted gross income between $125,000 and $135,000 ($250,000 and $260,000 in the case of a joint return).
1530- The $5,000 amount, which is indexed for inflation annually, also reflects the increase from $3,000 to $5,000 described more fully in Title I, section K of this document, below.
-Return to Explanation of Provision