(A credit is a dollar-for-dollar reduction of the taxes you owe.) That credit is scheduled to increase gradually to $1,000 by 2010. But Bush will ask Congress to boost that credit this year to $1,000. That means parents with two children will save an additional $800 a year. Ending the marriage penaltyMarriage penalty relief was built into the Tax Relief Act of 2001 on a graduated schedule, so that by 2009, married couples filing jointly would enjoy exactly double the size of the standard deduction single filers are entitled to. Also, the amount of income taxed at 15 percent for married couples would increase to twice the amount of income taxed at 15 percent for single filers. Bush, however, called for the full reduction of the marriage penalty to be implemented this year and the White House estimates 46 million couples will benefit. According to the Tax Foundation, the median family of four would save $532 if the penalty were eliminated. But that figure varies by state, since median incomes differ state to state. In Connecticut, a family of four earning the median income of $88,538 would save $1,541 if marriage relief took effect immediately. The same family in Wyoming, which earns a median income of $59,801, would save $533. Making permanent the estate tax repealAlthough the president's stimulus package does not include any provisions for accelerating the planned but temporary phase-out of the estate tax, he did say he would continue to press Congress to permanently end the taxation of estates. The estate tax is currently scheduled to phase out completely by 2010, but only for a year. And unless Congress passes new laws between now and then, the federal tax will be reinstated in 2011 and you will only be allowed to leave your heirs $1 million tax-free at that time. The federal "death tax," as it is often called, only affects a small number of estates -- roughly 2 percent. Even if Congress does repeal it -- temporarily or permanently -- it only means large estates would not be taxed by the federal government.
