article: SECTION 1. SHORT TITLE. (a) Short Title.--This Act may be cited as the ``Individual Income Tax Rate Reduction Act of 2001''. (b) Amendment of 1986 Code.--Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. (c) Section 15 Not To Apply.--No amendment made by this Act shall be treated as a change in a rate of tax for purposes of section 15 of such Code. SEC. 2. REDUCTION IN INDIVIDUAL INCOME TAX RATES. (a) Rates for 2001.--Section 1 (relating to tax imposed) is amended by striking subsections (a) through (e) and inserting the following: ``(a) Married Individuals Filing Joint Returns and Surviving Spouses.--There is hereby imposed on the taxable income of every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and 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: Not over $45,200............... 12% of taxable income. Over $45,200 but not over $109,250. $5,424, plus 25% of the excess over $45,200 Over $109,250 but not over $166,500. $21,436.50, plus 28% of the excess over $109,250 Over $166,500 but not over $297,350. $37,466.50, plus 35.5% of the excess over $166,500 Over $297,350.................. $83,918.25, plus 38.2% of the excess over $297,350 ``(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: Not over $36,250............... 12% of taxable income. Over $36,250 but not over $93,650. $4,350, plus 25% of the excess over $36,250 Over $93,650 but not over $151,650. $18,700, plus 28% of the excess over $93,650 Over $151,650 but not over $297,350. $34,940, plus 35.5% of the excess over $151,650 Over $297,350.................. $86,663.50, plus 38.2% of the excess over $297,350 ``(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 $27,050............... 12% of taxable income. Over $27,050 but not over $65,550. $3,246, plus 25% of the excess over $27,050 Over $65,550 but not over $136,750. $12,871, plus 28% of the excess over $65,550 Over $136,750 but not over $297,350. $32,807, plus 35.5% of the excess over $136,750 Over $297,350.................. $89,820, plus 38.2% of the excess over $297,350 ``(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: Not over $22,600............... 12% of taxable income. Over $22,600 but not over $54,625. $2,712, plus 25% of the excess over $22,600 Over $54,625 but not over $83,250. $10,718.25, plus 28% of the excess over $54,625 Over $83,250 but not over $148,675. $18,733.25, plus 35.5% of the excess over $83,250 Over $148,675.................. $41,959.12, plus 38.2% of the excess over $148,675 ``(e) Estates and Trusts.--There is hereby imposed on the taxable income of every estate, and every trust, taxable under this subsection a tax determined in accordance with the following table: ``If taxable income is: The tax is: Not over $1,800................ 12% of taxable income. Over $1,800 but not over $4,250 $216, plus 25% of the excess over $1,800 Over $4,250 but not over $6,500 $828.50, plus 28% of the excess over $4,250 Over $6,500 but not over $8,900 $1,458.50, plus 35.5% of the excess over $6,500 Over $8,900.................... $2,310.50, plus 38.2% of the excess over $8,900'' (b) Rate Reductions After 2001.--Section 1 is amended by adding at the end the following new subsection: ``(i) Rate Reductions After 2001.-- ``(1) In general.--In the case of taxable years beginning in a calendar year after 2001, the corresponding percentage specified for such calendar year in the following table shall be substituted for the otherwise applicable tax rate. ------------------------------------------------------------------------ The corresponding percentages shall be In the case of taxable years beginning during substituted for the calendar year: following percentages: ------------------------- 35.5% 38.2% ------------------------------------------------------------------------ 2002.......................................... 35.0% 37.0% 2003.......................................... 34.5% 35.8% 2004.......................................... 34.0% 34.6% 2005.......................................... 33.5% 33.5% 2006 and thereafter........................... 33.0% 33.0% ------------------------------------------------------------------------ ``(2) Adjustment of tables.--The Secretary shall adjust the tables prescribed under subsection (f) to carry out the reductions under this subsection.'' (c) Inflation Adjustment To Apply After 2001.--Subsection (f) of section 1 is amended-- (1) by striking ``1993'' in paragraph (1) and inserting ``2001'', and (2) by striking ``1992'' in paragraph (3)(B) and inserting ``2000''. (d) Conforming Amendments.-- (1) The following provisions are each amended by striking ``1992'' and inserting ``2000'' each place it appears: (A) Section 32(j)(1)(B). (B) Section 41(e)(5)(C). (C) Section 42(h)(3)(H)(i)(II). (D) Section 59(j)(2)(B). (E) Section 63(c)(4)(B). (F) Section 68(b)(2)(B). (G) Section 132(f)(6)(A)(ii). (H) Section 135(b)(2)(B)(ii). (I) Section 146(d)(2)(B). (J) Section 151(d)(4). (K) Section 220(g)(2). (L) Section 221(g)(1)(B). (M) Section 512(d)(2)(B). (N) Section 513(h)(2)(C)(ii). (O) Section 685(c)(3)(B). (P) Section 877(a)(2). (Q) Section 911(b)(2)(D)(ii)(II). (R) Section 2032A(a)(3)(B). (S) Section 2503(b)(2)(B). (T) Section 2631(c)(2). (U) Section 4001(e)(1)(B). (V) Section 4261(e)(4)(A)(ii). (W) Section 6039F(d). (X) Section 6323(i)(4)(B). (Y) Section 6334(g)(1)(B). (Z) Section 6601(j)(3)(B). (AA) Section 7430(c)(1). (2) Sections 25A(h)(1)(A)(ii) and 25A(h)(2)(A)(ii) are each amended by striking ``begins,'' and all that follows through ``thereof''. (3) Subclause (II) of section 42(h)(6)(G)(i) is amended by striking ``1987'' and inserting ``2000''. (e) Additional Conforming Amendments.-- (1) Subparagraph (B) of section 1(g)(7) is amended-- (A) by striking ``15 percent'' in clause (ii)(II) and inserting ``the first bracket percentage'', and (B) by adding at the end the following flush sentence: ``For purposes of clause (ii), the first bracket percentage is the percentage applicable to the lowest income bracket in the table under subsection (c).'' (2) Section 1(h) is amended-- (A) by striking ``28 percent'' both places it appears in paragraphs (1)(A)(ii)(I) and (1)(B)(i) and inserting ``25 percent'', and (B) by striking paragraph (13). (3) Section 15 is amended by adding at the end the following new subsection: ``(f) Rate Reductions Enacted by Individual Income Tax Rate Reduction Act of 2001.--This section shall not apply to any change in rates under subsection (i) of section 1 (relating to rate reductions after 2000).'' (4) Section 531 is amended by striking ``equal to'' and all that follows and inserting ``equal to the product of the highest rate of tax under section 1(c) and the accumulated taxable income.''. (5) Section 541 of such Code is amended by striking ``equal to'' and all that follows and inserting ``equal to the product of the highest rate of tax under section 1(c) and the undistributed personal holding company income.''. (6) Section 3402(p)(1)(B) is amended by striking ``7, 15, 28, or 31 percent'' and inserting ``7 percent, any percentage applicable to any of the 3 lowest income brackets in the table under section 1(c),''. (7) Section 3402(p)(2) is amended by striking ``equal to 15 percent of such payment'' and inserting ``equal to the product of the lowest rate of tax under section 1(c) and such payment''. (8) Section 3402(q)(1) is amended by striking ``equal to 28 percent of such payment'' and inserting ``equal to the product of the third to the lowest rate of tax under section 1(c) and such payment''. (9) Section 3402(r)(3) is amended by striking ``31 percent'' and inserting ``the third to the lowest rate of tax under section 1(c)''. (10) Section 3406(a)(1) is amended by striking ``equal to 31 percent of such payment'' and inserting ``equal to the product of the third to the lowest rate of tax under section 1(c) and such payment''. (11) Section 13273 of the Revenue Reconciliation Act of 1993 is amended by striking ``28 percent'' and inserting ``the third to the lowest rate of tax under section 1(c) of the Internal Revenue Code of 1986''. (f) Effective Dates.-- (1) In general.--Except as provided in paragraph (2), the amendments made by this section 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 (e) shall apply to amounts paid after the date of the enactment of this Act. SEC. 3. INCREASE IN STANDARD DEDUCTION. (a) In General.--Paragraph (2) of section 63(c) (relating to standard deduction) is amended to read as follows: ``(2) Basic standard deduction.--For purposes of paragraph (1), the basic standard deduction is-- ``(A) twice the dollar amount in effect under subparagraph (C) for the taxable year in the case of-- ``(i) a joint return, or ``(ii) a surviving spouse (as defined in section 2(a)), ``(B) $8,500 in the case of a head of household (as defined in section 2(b)), or ``(C) $6,000 in any other case.'' (c) Technical Amendments.-- (1) Paragraph (4) of section 63(c) is amended to read as follows: ``(4) Adjustments for inflation.-- ``(A) In general.--In the case of any taxable year beginning in a calendar year after 1988, each dollar amount contained in paragraph (2) or (5) or subsection (f) shall be increased by an amount equal to-- ``(i) such dollar amount, multiplied by ``(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins. The preceding sentence shall not apply to the amount referred to in paragraph (2)(A). ``(B) Base period adjustments.--In determining the adjustment under subparagraph (A), section 1(f)(3) shall be applied by substituting for `calendar year 1992' in subparagraph (B) thereof-- ``(i) `calendar year 1987' in the case of the dollar amount contained in paragraph (5)(A) or subsection (f), ``(ii) `calendar year 1997' in the case of the dollar amount contained in paragraph (5)(B)'', and ``(iii) `calendar year 2000' in the case of the dollar amounts contained in paragraph (2).'' (2) Subparagraph (B) of section 1(f)(6) is amended by striking ``subsection (c)(4) of section 63 (as it applies to subsections (c)(5)(A) and (f) of such section)'' and inserting ``section 63(c)(4)''. (d) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2000.
summary: Individual Income Tax Rate Reduction Act of 2001 - Amends the Internal Revenue Code to establish new, lower tax rates for individuals. Increases the standard deduction and provides that such deduction on a joint return shall be twice the amount of a single return.