• Individual income tax relief. Created the Making Work Pay Credit and the American Opportunity Tax Credit. Increased the EITC rate for families with three or more children to 45 percent; increased phaseout range for married couples to $5,000 over that for single/head of household filers. Lowered the threshold for determining the refundable child tax credit to $3,000 in 2009 and 2010. Converted the first-time homebuyer credit to a refundable credit. Exempted up to $2,400 of unemployment compensation received by each unemployed worker in 2009. Allowed an above-the-line deduction for sales tax on new cars purchased in 2009.
• AMT. Increased the AMT tax exemption to $46,700 for single filers and $70,950 for married filers and extended this through 2009. Extended the allowance of personal nonrefundable credits against the AMT through 2009.
• Business tax provisions. Extended through 2009 the increased Section 179 expensing. Allowed 50 percent bonus depreciation on qualifying investments made in 2009. Increased the net operating loss carry-back period from two to five years for small businesses. Expanded the Work Opportunity Tax Credit and the New Markets Tax Credit. Allowed businesses to defer income when they buy back or exchange their debt at a discount in 2009 and 2010. Allocated $25 billion for recovery zone bonds to be issued in 2009 or 2010.
• Renewable energy provisions. Extended and modified various energy conservation and renewable energy provisions.

• Provisions for homeowners. Created a property tax deduction for non-itemizers and a refundable credit for first-time homebuyers.
• Affordable housing provisions. Increased and simplified the Low Income Housing Tax Credit; simplified the rules for tax-exempt housing bonds; and temporarily extended the state and local mortgage revenue bond program.
• Other tax incentives. Reformed real estate investment trusts, imposed AMT limitations; increased corporate AMT and research and development credits; expanded the rehabilitation tax credit; and enhanced and extended some of the GO Zone incentives.
• Revenue-raising provisions. Required merchants to report credit card purchase information to the IRS; reduced the home sale exclusion; delayed the effective date of worldwide interest allocation rules; and accelerated estimated tax payments for large corporations.

AMT. Increased the AMT tax exemption to $44,350 for single filers and $66,250 for married filers and extended this through 2007. Extended the allowance of personal nonrefundable credits against the AMT through 2007.

• Extensions and modifications of certain tax credits. Extended and modified new markets tax credit for certain equity investments in a qualified community development entity (CDE) through 2008, extended and modified research tax credit through 2007, extended the Indian employment tax credit through 2007, and extended work opportunity tax credit and welfare-to-work tax credit for 2006 and combined and modified these for 2007.
• Extensions and modifications of certain deductions. Extended allowance of sales tax deduction in lieu of deduction for state and local income taxes through 2007, extended the deduction for teachers for school related expenses through 2007, extended deduction for qualified tuition and related expenses through 2007, and extended the enhanced deduction for computer technology and equipment through 2007.
• Earned Income Tax Credit. Extended election to include combat pay that is otherwise excluded from gross income in earned income for Earned Income Tax Credit.
• Zone academy bonds. Extends availability of qualified zone academy bonds (QZABs) for school modernization, equipment and teacher training in high poverty areas, imposes new arbitrage requirements and new spending requirements on QZABs.
• Economic development provisions. Extended tax incentives established by the Taxpayer Relief Act of 1997 for the District of Columbia through 2007, including designation of D.C. zones, wage credit, tax-exempt financing authority for bonds, zero-percent capital gains rate for certain qualified assets, and first-time homebuyer credit. Extended placed-in-service deadline for certain Gulf Opportunity Zone property extension property to qualify for additional first-year depreciation deduction. Provided economic development credit to American Samoa.
• Business provisions. Extended accelerated depreciation for business property on Indian reservations, extended 15-year straight-line cost recovery for qualified leasehold and restaurant improvements.
• Energy Tax Provisions. Allowed credit for electricity produced from certain renewable resources through 2008, extended placed-in-service date for tax credit for electricity produced at certain qualified facilities, extended and expanded clean renewable energy bonds (authorized an additional $400 million of CREBs and increased the maximum amount that may be allocated to qualified projects of governmental bodies to $750 million), allowed deduction for certain energy efficient commercial building property through 2008, extended and expanded to petroleum products expensing of "Brownfields" environmental remediation costs through 2007 for qualified contaminated sites.
• Health Savings Accounts (HSAs). Allowed a one-time rollover of health reimbursement account (HRA) and health flexible spending arrangement (FSA) funds into HSAs through 2011, repealed provision that limited the maximum annual deductible contribution to an HSA to that under a high-deductible insurance policy effective in 2007, allowed earlier indexing of cost of living adjustments for taxable years beginning after 2007, allowed full deductible contribution for months preceding the month that taxpayer is in high deductible plan beginning in 2007, and allowed one-time direct contribution to an HSA from an individual retirement arrangement (IRA) as of 2007.
• AMT provisions. Allowed refundable long-term individual AMT credit with respect to certain long-term unused alternative minimum tax (AMT) credits existing before January 1, 2013.
• Manufacturing deduction. Allowed deduction for income attributable to domestic production activities in Puerto Rico through 2007.

• Depreciation. Extended the increased expensing allowance for depreciable business property from $25,000 to $100,000; increased threshold amount for determining reductions to the expensing allowance; and increased the period during which a taxpayer may revoke an election to expense depreciable business property through 2009.
• Capital gains. Extended through 2010 reductions in capital gains and dividends tax rates (5 percent for taxpayers in the 15 percent bracket and 15 percent for others) enacted by JGTRRA (2003).
• Inflation adjustment. Accelerated the inflation adjustment to the exclusion amount for foreign earned income to 2006 from 2008; also, extended through 2008 certain exemptions for income of controlled foreign companies.
• AMT. Increased the AMT tax exemption, last altered in 2004 under WFTRA (2004), to $42,500 for single filers and $62,550 for married filers, and extended this through 2006.
• IRAs and Roth IRAs. Allowed taxpayers to convert traditional IRA balances into Roth IRAs; eliminated the income limit ($100,000) on Roth IRA conversions starting in 2010.
• Unearned income of minor children. Increased the age of minor children whose unearned income is taxed as if parent's income from 14 to 18 years old.
• Excise tax penalty. Imposed an excise tax penalty on certain tax-exempt entities for participation in prohibited tax shelter activities.

• Retirement funds. Exempted from the penalty on early distributions withdrawals of up to $100,000 from retirement plans through 2006 by individuals affected by Katrina and allowed the distribution to be repaid as a rollover within three years; allowed individuals to make rollover contributions of distributions from retirement plans made between March 1, 2005, and August 28, 2005, for purchase or construction of a principal residence if the residence was not purchased or constructed due to Katrina; and increased the limits on loans from tax-qualified retirement plans for Katrina victims.
• Employment incentives. Extended the work opportunity tax credit to apply to “Hurricane Katrina employees”; and allowed employers in the core disaster area a business tax credit of 40 percent of the first $6,000 of wages paid to core disaster area employees between August 29, 2005, and December 31, 2005.
• Charitable contributions. Suspended limits on individual and corporate deductions for cash donations to Katrina relief efforts in 2005; increased the mileage reimbursement rate for individuals who use a personal vehicle for Katrina relief through 2006; and expanded the deduction for donated food inventory and educational books in 2005.
• Personal exemption. Created an additional personal exemption of $500 to $2,000 for individuals providing free housing to persons displaced by Katrina for 60 consecutive days in 2005 or 2006.
• Additional provisions. Excluded from taxable income discharges of debt for individuals residing in Katrina-affected areas made between August 16, 2005, and December 31, 2006; allowed full deduction of personal casualty and theft losses for Katrina victims; suspended certain requirements for home loans financed by mortgage revenue bonds; extended to five years the replacement period for business and residential property damaged by Katrina to qualify for exclusion of income; and allowed displaced individuals to use 2004 income to calculate the EITC and refundable child tax credit.

• Provisions related to repeal of exclusion for extraterritorial income (ETI). Provided transitional relief for taxpayers subject to the ETI repeal by allowing a tax exclusion of 80 percent in 2005 and 60 percent in 2006 of extraterritorial income; created deduction relating to income attributable to U.S. production activities.
• Business tax incentives. Increased section 179 expensing from $25,000 to $100,000 and increased the phase-out threshold amount from $200,000 to $400,000; included software in section 179 property; and extended indexing of deduction limit and phaseout threshold through 2007; instituted 15-year straight-line cost recovery for qualified (1) leasehold improvements and (2) restaurant improvements, through 2005 only; provided S-corporation reform and simplification; repealed 4.3-cent General Fund excise taxes on various fuels usually through 2005 or 2006; and modified application of the income forecast method of accounting; provided incentives to film and television production and repealed some taxes on distilled spirits, wine, and beer, among other incentives.
• Provisions relating to tax relief for agriculture and small manufacturers. Provided that the General Fund be used to pay all alcohol and fuel and excise taxes; provided outlay payments (in lieu of excise tax credits and refunds) to producers of alcohol fuel mixtures; and provided tax credits for biodiesel (again, from the General Fund); extended some bonus depreciation rules for certain aircraft, among other items.
• Tax reform and simplification for U.S. businesses. Provided incentives to reinvest foreign earnings in the U.S.; installed new interest expense allocation rules; re-characterized overall domestic loss; applied look-through rules for dividends for certain section 902 corporations; based differences and reduction to 2 foreign tax credit baskets; implemented 10-year foreign tax credit carryforward and 1 year carryback; and repealed the 90 percent limitation on the use of foreign tax credits against the AMT among other items.
• Allowed deduction by businesses of state and local general sales taxes through 2005.
• Miscellaneous provisions. Extended and expanded credit for electricity produced from certain renewable resources, among many other items.
• Revenue provisions. Extended certain custom user fees; reformed the tax treatment of leasing transactions; modified the dispositions of transmission property to implement FERC restructuring policy; installed provisions to reduce tax avoidance and curtail tax shelters; modified charitable contribution rules for donations of patents and other intellectual property; modified the valuation of the charitable deduction for vehicles; and provided consistent amortization periods for intangibles, among many other items.

• Introduced Health Savings Accounts. Allowed taxpayers under age 65 to make tax-free deposits up to the deductible on a high deductible plan if they also purchase a catastrophic health policy.
• Provided tax exclusions for certain employer subsidies.
• Increased taxes indirectly by reducing employer incentives to retain prescription drug insurance coverage.
• Introduced a new income-related premium for future Medicare Part B participants based on IRS records sent to the Social Security Administration.

• Accelerated provisions of EGTRRA (2001). Expanded child tax credit to $1,000 per child for 2003-04, reverting to present law (2001-enacted phase ins and outs) in 2005; expanded 15 percent tax bracket and standard deduction for joint filers to double the ranges and levels for single filers for 2003-04, reverting to present law in 2005; expanded 10 percent bracket for 2003-04, reverting to present law in 2005; implemented 2006 rate schedule: 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent; increases individual AMT exemption amount by $4,500 single and $9,000 joint for 2003-04.
• Capital gains and dividends. Taxed capital gains with a 15 percent rate for most gains and 5 percent for gains of moderate income taxpayers for 2003-07; becomes 15 percent/0 percent in 2008 and reverts to present law in 2009. Taxed dividends with a 15 percent/5 percent rate structure for 2003-07, 15 percent/0 percent in 2008, reverting to present law in 2009.
• Depreciation. Increased bonus depreciation or expensing to 50 percent for physical asset purchases for 2003-04, reverting to present law in 2005; increased section 179 (100 percent) expensing by raising expensible amounts from $25,000 to $100,000 and the phase-out threshold amount from $200,000 to $400,000.
• Aid to states. Provided states $20 billion in fiscal relief over 2003-04.

• Individual income tax rate reductions. When fully-phased in 2006, levied a new 10 percent rate on the first $12,000 of income for a married couple ($10,000 for a single head of household and $6,000 for an individual); the 15 percent rate begins thereafter; reduced 28 percent rate to 25 percent, the 31 percent rate to 28 percent, the 36 percent rate to 33 percent and the 39.6 percent rate to 35 percent. Repealed the phaseout of the itemized deduction and personal exemption by 2008. Made the 10 percent bracket retroactive, resulting in refund checks of up to $300 for individuals and $600 for couples 4-5 months hence.
• Child tax credit increase. Doubled the $500 per child tax credit to $1,000 and made it refundable for persons earning above $10,000 to the extent of 10 percent for every dollar of earned income above $10,000 up to the maximum per child. The refundability rate rises to 15 percent in 2005 and the $10,000 threshold is indexed for inflation.
• Marriage penalty abatement. Lowered marriage penalties for couples by making the standard deduction and 15 percent bracket twice the size as for a single taxpayer.
• Child and dependent care tax credit increases. Provided a credit of 25 percent on expenditures for employer-provided childcare and increases the dependent care and adoption credits.
• Estate and gift tax reduction and elimination. Gradually reduced the estate and gift tax rate from 55 percent to 45 percent by 2007; raised the effective exemption from $1 million in 2002 to $3.5 million in 2009. Eliminated the estate tax portion entirely in 2010 in lieu of a capital gains tax with high disregard ($3.3 million) for transfers to a surviving spouse.
• PEP and PEASE. Phased-in both the repeal of the personal exemption phase out (PEP) and the repeal of the Pease cut back in itemized deductions, over five years.
• Retirement savings contribution ceiling increases. Increased IRA annual contribution limits from $2,000 to $5,000 and 401(k) limits from $10,000 to $15,000; allowed individuals 50 and older to make larger, catch-up contributions; permitted Roth 401(k)s beginning in 2006; and established a temporary credit for retirement savings for households earning $50,000 or less.
• Education credit and deduction expansions. Among others, allowed $4,000 maximum deduction of college tuition expenses; allowed tax-free distributions from pre-paid college tuition plans, allowed private institutions to offer these, and allowed taxpayers to simultaneously claim HOPE or Lifetime Learning credits in some instances; eliminated the 60 month limit on student loan interest deduction.