TECHNICAL EXPLANATION OF THE MARRIAGE 

TAX PENALTY RELIEF RECONCILIATION ACT OF 2000 

H.R. 4810 

Prepared by the Staff 

of the 

JOINT COMMITTEE ON TAXATION 

July 11, 2000 

JCX-67-00
i 

CONTENTS 

Page

I. INTRODUCTION............................................................................................... 1 

II. SUMMARY AND BACKGROUND ................................................................. 2 

III. EXPLANATION OF THE BILL........................................................................ 3 

 A. Standard Deduction Tax Relief..................................................................... 3 

 B. Expansion of the 15-Percent Rate Bracket and Repeal of Reduction of 

 Refundable Tax Credits................................................................................. 4 

 C. Marriage Penalty Relief Relating to the Earned Income Credit.................... 6 

 
1 

I. INTRODUCTION 

This document1

, prepared by the staff of the Joint Committee on Taxation, provides a 

“Technical Explanation of the Marriage Tax Penalty Relief Reconciliation Act of 2000.” The 

bill complies with the instruction to the Ways and Means Committee, regarding tax relief, under 

the concurrent resolution on the budget for fiscal year 2001.2

 1

 This document may be cited as follows: Joint Committee on Taxation, Technical Explanation of the 

Marriage Tax Penalty Relief Reconciliation Act of 2000 (JCX-67-00), July 11, 2000. 

2

 The Ways and Means Committee reported a similar bill (the “Marriage Tax Penalty Relief Act of 2000”) 

on February 7, 2000 (H. Rept. 106-493). 
2 

II. SUMMARY AND BACKGROUND 

A. Summary 

Standard deduction tax relief.--The bill increases the basic standard deduction for a 

married couple filing a joint return to twice the basic standard deduction for an unmarried 

individual for taxable years beginning after December 31, 2000. 

 Expansion of the 15-percent rate bracket and repeal of reduction of refundable credits.--

The bill increases the size of the 15-percent regular income tax rate bracket for a married couple 

filing a joint return to twice the size of the corresponding rate bracket for an unmarried 

individual. This increase is phased in over six years effective for taxable years beginning after 

December 31, 2002. The increase is fully effective for taxable years beginning after December 

31, 2007. The bill repeals the provisions that reduce the refundable child credit and the earned 

income credit by the amount of the individual’s alternative minimum tax, effective for taxable 

years beginning after December 31, 2001. 

 Marriage penalty relief relating to the earned income credit.--The bill increases the 

beginning point of the phase-out range of the earned income credit for a married couple filing a 

joint return by $2,000. This provision is effective for taxable years beginning after December 

31, 2000. 

B. Background 

 The bill provides reconciliation pursuant to section 103(a)(1) of the concurrent resolution 

on the budget for fiscal year 2001. The provisions, as previously approved by the Committee on 

Ways and Means, are intended to reflect the need for tax relief for married couples (e.g., the 

provisions will reduce the increase in tax liability that can occur under present law when two 

individuals marry). 
3 

III. EXPLANATION OF THE BILL

A. Standard Deduction Tax Relief 

(sec. 2 of the bill and sec. 63 of the Code)

Present Law

Marriage penalty

 A married couple generally is treated as one tax unit that must pay tax on the couple’s 

total taxable income. Although married couples may elect to file separate returns, the rate 

schedules and other provisions are structured so that filing separate returns usually results in a 

higher tax than filing a joint return. Other rate schedules apply to single persons and to single 

heads of households. 

 A "marriage penalty" exists when the combined tax liability of a married couple filing a 

joint return is greater than the sum of the tax liabilities of each individual computed as if they 

were not married. A “marriage bonus” exists when the combined tax liability of a married 

couple filing a joint return is less than the sum of the tax liabilities of each individual computed 

as if they were not married. 

 While the size of any marriage penalty or bonus under present law depends upon the 

individuals' incomes, number of dependents, and itemized deductions, as a general rule married 

couples whose incomes are split more evenly than 70-30 suffer a marriage penalty. Married 

couples whose incomes are largely attributable to one spouse generally receive a marriage bonus. 

 Under present law, the size of the standard deduction and the tax bracket breakpoints 

follow certain customary ratios across filing statuses. The standard deduction and tax bracket 

breakpoints for single filers are roughly 60 percent of those for joint filers.3

 Thus, two unmarried 

individuals have standard deductions whose sum exceeds the standard deduction for a married 

couple filing a joint return. 

Basic standard deduction4

 Taxpayers who do not itemize deductions may choose the basic standard deduction (and 

additional standard deductions, if applicable), which is subtracted from adjusted gross income 

(“AGI”) in arriving at taxable income. The size of the basic standard deduction varies according 

to filing status and is indexed for inflation. For 2000, the size of the basic standard deduction for 

each filing status is shown in the following table: 

 3

 This is not true for the 39.6-percent rate. The beginning point of this rate bracket is the 

same for all taxpayers regardless of filing status. 

4

 Additional standard deductions are allowed with respect to any individual who is 

elderly (age 65 or over) or blind. 
4 

Table 1.--Basic Standard Deduction Amounts

Filing status

Basic 

Standard deduction

Married, joint return $7,350 

Head of household return $6,450 

Single return $4,400 

Married, separate return $3,675 

 For 2000, the basic standard deduction for joint returns is projected to be 1.67 times the 

basic standard deduction for single returns. 

Description of Proposal

 The bill increases the basic standard deduction for a married couple filing a joint return to 

twice the basic standard deduction for an unmarried individual beginning in 2001. The basic 

standard deduction for a married taxpayer filing separately will continue to equal one-half of the 

basic standard deduction for a married couple filing jointly. 

Effective date.--The provision is effective for taxable years beginning after December 31, 

2000. 

B. Expansion of the 15-Percent Rate Bracket and 

Repeal of Reduction of Refundable Tax Credits 

(sec. 3 of the bill and secs. 1, 24, and 32 of the Code)

Present Law

Rate brackets

 To determine regular income tax liability, a taxpayer generally must apply the tax rate 

schedules (or the tax tables) to his or her taxable income. The rate schedules are broken into 

several ranges of income, known as income brackets, and the marginal tax rate increases as a 

taxpayer's income increases. The income bracket amounts are indexed for inflation. Separate 

rate schedules apply based on an individual's filing status. In order to limit multiple uses of a 

graduated rate schedule within a family, the net unearned income of a child under age 14 may be 

taxed as if it were the parent's income. For 2000, the individual regular income tax rate 

schedules are shown below. These rates apply to ordinary income; separate rates apply to capital 

gains. 
5 

Table 2.--Federal Individual Income Tax Rates for 2000 

If taxable income is: Then income tax equals:

Single individuals

$0-26,250 15 percent of taxable income

$26,250-$63,550 $3,937.50, plus 28% of the amount over $26,250

$63,550-$132,600 $14,381.50 plus 31% of the amount over $63,550

$132,600-$288,350 $35,787 plus 36% of the amount over $132,600

Over $288,350 $91,857 plus 39.6% of the amount over $288,350

Heads of households

$0-$35,150 15 percent of taxable income

$35,150-$90,800 $5,272.50 plus 28% of the amount over $35,150

$90,800-$147,050 $20,854.50 plus 31% of the amount over $90,800

$147,050-$288,350 $38,292 plus 36% of the amount over $147,050

Over $288,350 $89,160 plus 39.6% of the amount over $288,350

Married individuals filing joint returns5

$0-$43,850 15 percent of taxable income

$43,850-$105,950 $6,577.50 plus 28% of the amount over $43,850

$105,950-$161,450 $23,965.50 plus 31% of the amount over $105,950

$161,450-$288,350 $41,170.50 plus 36% of the amount over $161,450

Over $288,350 $86,854.50 plus 39.6% of the amount over $288,350

Reduction of refundable credits by alternative minimum tax

 Refundable credits may offset tax liability determined under present-law tax rates and 

allow refunds to an individual in excess of income tax liability. However, the refundable child 

credit (beginning in taxable years beginning after December 31, 2001) and the earned income 

credit are reduced by the amount of an individual’s alternative minimum tax. 

 The Committee believes that families should be able to use the refundable credits without 

limitation by reason of the minimum tax. In addition, eliminating the reduction of the refundable 

credits by the minimum tax will result in significant simplification. 

 5

 Married individuals filing separately must apply a separate rate structure with tax rate 

brackets one-half the width of those for married individuals filing joint returns. 
6 

Description of Proposal

Rate brackets

 The bill increases the size of the 15-percent regular income tax rate bracket for a married 

couple filing a joint return to twice the size of the corresponding rate bracket for an unmarried 

individual. This increase is phased in over six years as shown in the following table. Therefore, 

this provision is fully effective (i.e., the size of the 15-percent regular income tax rate bracket for 

a married couple filing a joint return will be twice the size of the 15-percent regular income tax 

rate bracket for an unmarried individual) for taxable years beginning after December 31, 2007. 

Taxable year

Percentage of 15-percent rate 

bracket for unmarried individuals

2003 170.3 

2004 173.8 

2005 183.5 

2006 184.3 

2007 187.9 

2008 and thereafter 200.0 

Reduction of refundable credits by alternative minimum tax

 The bill repeals the provisions that reduce the refundable child credit and the earned 

income credit by the amount of an individual’s alternative minimum tax. 

Effective date.--The provision relating to the 15-percent rate bracket is effective for 

taxable years beginning after December 31, 2002. The repeal of the present-law reduction in the 

child credit and the earned income credit is effective for taxable years beginning after December 

31, 2001. 

C. Marriage Penalty Relief Relating to the Earned Income Credit 

(sec. 4 of the bill and sec. 32 of the Code)

Present Law

 Certain eligible low-income workers are entitled to claim a refundable earned income 

credit (“EIC”) on their income tax return. A refundable credit is a credit that not only reduces an 

individual’s tax liability but allows refunds to the individual of amounts in excess of income tax 

liability. The amount of the credit an eligible individual may claim depends upon whether the 

individual has one, more than one, or no qualifying children, and is determined by multiplying 

the credit rate by the individual’s earned income up to an earned income amount. The maximum 

amount of the credit is the product of the credit rate and the earned income amount. The credit is 
7 

phased out above certain income levels. For individuals with earned income (or modified AGI, 

if greater) in excess of the beginning of the phase-out range, the maximum credit amount is 

reduced by the phase-out rate multiplied by the earned income (or modified AGI, if greater) in 

excess of the beginning of the phase-out range. For individuals with earned income (or modified 

AGI, if greater) in excess of the end of the phase-out range, no credit is allowed. In the case of a 

married individual who files a joint return, the income for purposes of these tests is the combined 

income of the couple. 

 The parameters of the credit for 2000 are provided in the following table: 

Table 3.--Earned Income Credit Parameters (2000) 

Two or more 

qualifying 

children

One qualifying 

child

No qualifying 

children

Credit rate (percent) 

Earned income amount 

Maximum credit 

40.00 

$9,720 

$3,888

34.00 

$6,920 

$2,353

7.65 

$4,610 

$353

Phase-out begins 

Phase-out rate (percent) 

$12,690 

21.06

$12,690 

15.98

$5,770 

7.65

Phase-out ends $31,152 $27,413 $10,380

Description of Proposal

 The bill increases the beginning point of the phase-out range of the EIC for married 

couples filing a joint return by $2,000. Because the rate of the phase-out range is not changed by 

the bill, the end-point of the phase-out range is also increased by $2,000. The effect of the 

increase in the beginning of the phase-out range is to increase the EIC for taxpayers in the phaseout range by an amount up to $2,000 times the phase-out rate. For example, for couples with 

two or more qualifying children, the maximum increase in the EIC as a result of the provision 

will be $2,000 multiplied by 21.06 percent, or $421.20. The bill also expands the number of 

married couples eligible for the EIC. Specifically, the $2,000 increase in the end of the phaseout range will make married couples with earnings up to $2,000 beyond the present-law phaseout range eligible for the credit. The beginning and ending points of the phase-out range of the 

EIC (including the $2,000 increase for joint returns) will continue to be indexed for inflation, as 

under present law. 

Effective date.--The provision is effective for taxable years beginning after December 31, 

2000.