Middle Class Tax Relief Act of 1998

Summary: Middle Class Tax Relief Act of 1998 - Amends the Internal Revenue Code to revise the tax imposed and increase the 15 percent tax bracket for joint returns and surviving spouses, heads of households, other unmarried individuals, married individuals filing separately, and estates and trusts.

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Middle Class Tax 
Relief Act of 1998''.I20    (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 section 2 shall 
be treated as a change in a rate of tax for purposes of section 15 of 
the Internal Revenue Code of 1986.

SEC. 2. INCOME TAXED AT LOWEST RATE INCREASED TO $35,000 FOR UNMARRIED 
              INDIVIDUALS, $70,000 FOR JOINT RETURNS AND SURVIVING 
              SPOUSES, AND $52,600 FOR HEADS OF HOUSEHOLDS.

    (a) General Rule.--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--
            ``(1) every married individual (as defined in section 7703) 
        who makes a single return jointly with his spouse under section 
        6013, and
            ``(2) 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 $70,000...............
                                        15% of taxable income.
    Over $70,000 but not over 
        $102,300.
                                        $10,500, plus 28% of the excess 
                                                over $70,000.
    Over $102,300 but not over 
        $155,950.
                                        $19,544, plus 31% of the excess 
                                                over $102,300.
    Over $155,950 but not over 
        $278,450.
                                        $36,175, plus 36% of the excess 
                                                over $155,950.
    Over $278,450..................
                                        $80,275, plus 39.6% of the 
                                                excess over $278,450.
    ``(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 $52,600...............
                                        15% of taxable income.
    Over $52,600 but not over 
        $87,700.
                                        $7,890, plus 28% of the excess 
                                                over $52,600.
    Over $87,700 but not over 
        $142,000.
                                        $17,718, plus 31% of the excess 
                                                over $87,700.
    Over $142,000 but not over 
        $278,450.
                                        $34,551, plus 36% of the excess 
                                                over $142,000.
    Over $278,450..................
                                        $83,673 plus 39.6% of the 
                                                excess over $278,450.
    ``(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 $35,000...............
                                        15% of taxable income.
    Over $35,000 but not over 
        $61,400.
                                        $5,250, plus 28% of the excess 
                                                over $35,000.
    Over $61,400 but not over 
        $128,100.
                                        $12,642, plus 31% of the excess 
                                                over $61,400.
    Over $128,100 but not over 
        $278,450.
                                        $33,319, plus 36% of the excess 
                                                over $128,100.
    Over $278,450..................
                                        $87,445, plus 39.6% of the 
                                                excess over $278,450.
    ``(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 $35,000...............
                                        15% of taxable income.
    Over $36,000 but not over 
        $51,150.
                                        $5,250, plus 28% of the excess 
                                                over $35,000.
    Over $51,150 but not over 
        $77,975.
                                        $9,772, plus 31% of the excess 
                                                over $51,150.
    Over $77,975 but not over 
        $139,225.
                                        $18,088, plus 36% of the excess 
                                                over $77,975.
    Over $139,225..................
                                        $40,138, plus 39.6% of the 
                                                excess over $139,225.
    ``(e) Estates and Trusts.--There is hereby imposed on the taxable 
income of--
            ``(1) every estate, and
            ``(2) every trust,
taxable under this subsection a tax determined in accordance with the 
following table:Q10
``If taxable income is:             The tax is:
    Not over $1,700................
                                        15% of taxable income.
    Over $1,700 but not over $4,000
                                        $255, plus 28% of the excess 
                                                over $1,700.
    Over $4,000 but not over $6,100
                                        $899, plus 31% of the excess 
                                                over $4,000.
    Over $6,100 but not over $8,350
                                        $1,550, plus 36% of the excess 
                                                over $6,100.
    Over $8,350....................
                                        $2,360, plus 39.6% of the 
                                                excess over $8,350.''. 
    (b) Inflation Adjustment To Apply in Determining Rates for 1999.--
Subsection (f) of section 1 is amended--
            (1) by striking ``1993'' in paragraph (1) and inserting 
        ``1998'', 
            (2) by striking ``1992'' in paragraph (3)(B) and inserting 
        ``1997'', and
            (3) by striking paragraph (7).
    (c) Conforming Amendments.--
            (1) The following provisions are each amended by striking 
        ``1992'' and inserting ``1997'' each place it appears: 
                    (A) Section 25A(h).
                    (B) Section 32(j)(1)(B).
                    (C) Section 41(e)(5)(C).
                    (D) Section 42(h)(6)(G)(i)(II).
                    (E) Section 68(b)(2)(B).
                    (F) Section 135(b)(2)(B)(ii).
                    (G) Section 151(d)(4).
                    (H) Section 221(g)(1)(B).
                    (I) Section 512(d)(2)(B).
                    (J) Section 513(h)(2)(C)(ii).
                    (K) Section 877(a)(2).
                    (L) Section 911(b)(2)(D)(ii)(II). 
                    (M) Section 4001(e)(1)(B).
                    (N) Section 4261(e)(4)(A)(ii).
                    (O) Section 6039F(d).
                    (P) Section 6334(g)(1)(B).
                    (Q) Section 7430(c)(1).
            (2) Subparagraph (B) of section 59(j)(2) is amended by 
        striking ``, determined by substituting `1997' for `1992' in 
        subparagraph (B) thereof''.
            (3) Subparagraph (B) of section 63(c)(4) is amended by 
        striking ``by substituting for'' and all that follows and 
        inserting ``by substituting for `calendar year 1997' in 
        subparagraph (B) thereof `calendar year 1987' in the case of 
        the dollar amounts contained in paragraph (2) or (5)(A) or 
        subsection (f).''
            (4) Subparagraph (B) of section 132(f)(6) is amended by 
        inserting before the period ``, determined by substituting 
        `calendar year 1992' for `calendar year 1997' in subparagraph 
        (B) thereof''.
            (5) Paragraph (2) of section 220(g) is amended by striking 
        ``by substituting `calendar year 1997' for `calendar year 1992' 
        in subparagraph (B) thereof''.
            (6) Subparagraph (B) of section 685(c)(3) is amended by 
        striking ``, by substituting `calendar year 1997' for `calendar 
        year 1992' in subparagraph (B) thereof''.
            (7) Subparagraph (B) of section 2032A(a)(3) is amended by 
        striking ``by substituting `calendar year 1997' for `calendar 
        year 1992' in subparagraph (B) thereof''.
            (8) Subparagraph (B) of section 2503(b)(2) is amended by 
        striking ``by substituting `calendar year 1997' for `calendar 
        year 1992' in subparagraph (B) thereof''.
            (9) Paragraph (2) of section 2631(c) is amended by striking 
        ``by substituting `calendar year 1997' for `calendar year 1992' 
        in subparagraph (B) thereof''.
            (10) Subparagraph (B) of 6601(j)(3) is amended by striking 
        ``by substituting `calendar year 1997' for `calendar year 1992' 
        in subparagraph (B) thereof''.
    (d) Modification of Withholding Tables for Taxable Year 1998.--
Notwithstanding the provisions of section 3402(a) of the Internal 
Revenue Code of 1986, the Secretary of the Treasury shall modify the 
tables and procedures under section 3402(a)(1) of such Code to reflect 
the amendment made by subsection (a). Such modification shall--
            (1) take effect on July 1, 1998, and
            (2) reflect the entire reduction in taxes for calendar year 
        1998 made by such amendment during the 6-month period beginning 
        July 1, 1998. 
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1997.