Benefits

• The benefits of the Family Tax Relief Act are centered in four individual areas: providing an increase in the child tax credit, resolving the so-called marriage penalty, allowing a favorable tax rate adjustment for certain families and allowing combat pay to be utilized for computing the child tax credit but keeping it exempt from direct taxation nonetheless. Technically what the Family Tax Relief Act does is extend these pre-existing benefits to taxpaying families into the future, through 2010.
  
  

Elimination of Marriage Penalty

• In the absence of the Family Tax Relief Act, married taxpayers in the United States confront what commonly is referred to as the marriage penalty. In other words, because of the way the Internal Revenue Code operates, many married taxpayers end up paying a higher percentage in taxes simply because of the fact that they are married. The Family Tax Relief Act eliminates this disparity through 2010. The Act accomplishes this by doubling the standard deduction for a married couple.
  
  

Extension of Child Tax Credit

• Another benefit associated with the Family Tax Relief Act is the extension of an enhanced child tax credit. Specifically, under the Act the maximum per child tax credit of $1,000 is extended through tax year 2010. Unless new legislation is enacted before the end of 2010, the per child tax credit returns to $500.
  
  

Adjusted Tax Rate

• The Family Tax Relief Act includes a provision that expands the 10 percent rate tax bracket for individual payers. Specifically, through the end of 2010, the 10 percent bracket is set at the 2003 level. This provision is targeted to provide tax relief to single family households.
  
  

Combat Pay Credit

• Men and women in the Armed Services were at a disadvantage when it came to the child tax credit. While they enjoyed the benefit of not having combat pay taxed as regular income, they also were unable to utilize it in the computation of the child tax credit. The Family Tax Relief Act allows combat pay to be utilized in the calculation of the refundable portion of this child tax credit. However, it remains excluded for the purposes of determining gross income.
  
  

Time Frame

• The provisions of the Family Tax Relief Act are set to "sunset" or be eliminated at the conclusion of tax year 2010. At that point in time, the benefits provided by this legislation will revert back to what existed previously. As has occurred once in the past, Congress and the President may elect to extend these family-oriented tax benefits into the future or enact a new benefit scheme.