On March 30, 2000, The Senate Finance Committee narrowly made the vote to approve legislation to provide relief from the marriage penalty. A similar relief plan was passed in February by the House of Representatives with an estimated cost of $182 billion. The Senate bill is estimated to cost $248 billion over 10 years. Both bills are similar in that each would increase the standard deduction for married couples, expand the earned income tax credit and enlarge the 15-percent income tax bracket so that more income is taxed at the lowest rate. In addition to the House bill, the Senate bill would also enlarge the 28 percent tax bracket to help more couples with higher incomes as well as incorporating a provision that would permanently protect middle-income taxpayers from having their personal tax credits reduced by the alternative minimum tax. Currently, the law provides AMT protection only through 2001.
The Senate bill will increase the basic standard deduction for married couples filing a joint tax return to twice the basic standard deduction for single individuals starting in 2001. The basic standard deduction for joint returns for the year 2000 is only 1.67 times the basic standard deduction for single returns. Basic standard deductions for married couples filing separately will remain the same at one-half that of married couples filing jointly.
Basic Standard Deduction Amounts for 2000
| Single | $4,400 |
| Unmarried head of household | $6,450 |
| Married, filing separately | $3,675 |
| Married filing jointly or qualifying widow(er) | $7,350 |
The bill also calls for an increase in size of the 15% regular income tax rate bracket for married couples filing joint returns to twice the size of the corresponding rate bracket for single people. The increase will be phased in over six years starting in 2002 and would therefore be fully available in 2007.
The beginning and end points of the Earned Income Credit phase-out for married couples will also increase by $2,000 with the new proposal. The additional $2,000 added onto the beginning point serves to increase the EIC available to tax payers as well as expanding the number of married couples eligible for the EIC. The increase in the ending point of the phase-out will make couples with income up to $2,000 beyond the present law eligible for the EIC.
