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     Finally, after 20 years since the last major tax cut, President Bush signed a $1.35 trillion tax cut on Monday!  After working for months on this issue, we are pleased with the final outcome that includes the elimination of the death tax and cuts in the marginal tax rates, and meaningful pension reform.  The only "negative" if that there is a provision included in the final bill (called the Byrd rule) that would sunset all of these tax cuts, but that would not happen until 2011, and we are confident that Congress will act in that year to make these cuts permanent.  Here is a summary of the different provisions in the final tax cut bill:

*    INSTANT REBATE-  Starting after mid-July, almost everyone who filed
a tax return for 2000 will be mailed a government check - a maximum of $600 for married filers, and $300 for single filers - sort of an advance refund.
The check will amount to 5% of last year's taxable income, up to $12,000 for
married filers and $6,000 for single filers.  This refund reflects a rate
change at the bottom of the tax structure from 15% to 10%.  The checks are
being sent now in hopes to stimulate the economy.
*    MARGINAL TAX RATES- Income now is taxed at five rates ranging from
15% to 39.6%. The new law will reduce and compress existing brackets so that
income will be taxed at six rates ranging from 10% to 35%.  Each bracket
will be lowered by roughly 3% with the lowest bracket be lowered 5% and the
top rate be lowered 4.6%.  These rate cuts will begin this year, but will
not be complete for 6 years.  The lowering of the top rate (39.6% to 35%)
was an especially important victory as many of our members are S-Corps or
other wise formed and are therefore taxed at the highest individual rate.
*    IRA REFORM- Gradually raises the maximum amount that can be
contributed to an IRA from $2,000 to $5,000 in 2008.  It will also let
people age 50 and older contribute an additional amount, called a catch-up
contribution. From 2002 to 2005, the catch-up is $500 a year. It goes up to
$1,000 in 2006.
*    401K REFORM-   Gradually raises the maximum amount of employee
contributions from $10,000 to $15,000 by 2006.  It also creates a Roth
401(k), which takes effect in 2006. This will allow for after-tax
contributions that grow tax-free. Some rules will differ from Roth IRAs.
*    MARRIAGE PENALTY-The bill makes provisions for eliminating the
"marriage penalty" - the amount that some couples pay in excess of what
they'd owe if they were single and filing separately. The elimination of the
marriage penalty won't start until 2005, and will be phased in over 5 years.

*    ESTATE TAX-  Despite earlier reports coming out of the conference,
we are happy to tell you that all our hard work paid off with the successful
elimination of the death tax! The exemption from estate taxes, now at
$675,000, gradually increases to $3.5 million through 2009. At the same
time, the top tax rate on taxable estates, now at 55%, gradually decreases
to 45%. At the beginning of 2010, the tax will be repealed.  Again, however,
due to the "Byrd Rule", (the sunsetting problem mentioned above) the
elimination might only last 9 months.
     As you can see, the final tax bill has many components that should
help all Americans.  As small business owners, IIAA members will see many
benefits from this bill that will help now, and in years to come.  However,
even with these victories, IIAA is not finished fighting for more tax
relief.  We will continue fighting for lowering capital gains rates, and
other legislation that would provide tax deductions for small businesses.