Congress recently passed the "Jobs and Growth Tax Relief Reconciliation Act of 2003," which contains immediate reductions in individual tax rates, depreciation, dividends and capital gains, and also sends $10 billion to states and local governments that can be used for infrastructure or other spending, plus $10 billion for medicaid. Unlike the Senate version, the final bill contains no revenue raisers.
Of specific benefit to construction, the bill cuts individual tax rates retroactive to Jan. 1, 2003; reduces the tax on both dividends and capital gains to a maximum of 15 percent starting in 2003; expands the "30 percent bonus depreciation" to an immediate write-off (expensing) of 50 percent of the cost of new equipment bought after May 5, 2003 and before Jan. 1, 2005; and permits firms that buy up to $400,000 of equipment to expense $100,000 in 2003-2005 (vs. limits of $200,000 and $25,000 under current law). To fit within the Senate's cap of $350 billion of relief, the bill "sunsets" many of these provisions after a few years.