Economic Recovery Tax Act of 1981

Tax Incentive Act of 1981 - Title I: Individual Income Tax Provisions - Amends the Internal Revenue Code to reduce individual and estate and trust income tax rates for 1981 and 1982, with further reductions in 1983 and thereafter. Conditions the 1984 tax reduction upon the attainment of specified levels in the budget deficit, the Consumer Price Index, and the Treasury bill rate in 1983. Authorizes the Secretary of the Treasury to issue regulations permitting workers to increase or decrease their withholding allowances. Reduces the highest marginal tax rate on all types of income from 70 to 60 percent in 1982 and to 50 percent in 1983. Repeals the existing 50 percent maximum tax rate on personal service income, effective in 1983. Increases the zero bracket amount for each category of taxpayer. Increases the income levels at which a taxpayer is required to file an income tax return. Reduces the alternative minimum tax and the personal holding company tax to correspond with the reductions in the highest marginal tax rate. Increases the rate of the earned income tax credit from ten to 11 percent of the first $5,000 of earnings beginning in 1982. Provides for increases in the maximum allowable dollar amount of such credit in 1982 and 1984. Allows married individuals filing a joint return an income tax deduction from gross income of ten percent of the lesser of $50,000 or the earned…

Congressional Research Service · 1981-07-23