The following information is a brief overview of some of the tax law changes that came into effect in 2003.

• Standard Business Mileage Rate –The optional standard mileage rate for operating your car for business is 36 cents per mile for all business miles driven in 2003. For more detailed information, refer to Publication 463, Travel, Entertainment, Gift, and Car Expense, and Publication 535, Business Expenses.
• Adoption Tax Benefits –The maximum adoption credit or exclusion has increased from $10,000 to $10,160. In the case of the adoption of a child with special needs, this amount will be allowed regardless of whether you have qualifying expenses. See Publication 968, Tax Benefits for Adoption, for more information.
• Self-Employed Health Insurance Deduction –The deduction for the amount paid for medical and qualified long-term care insurance for self and family has increased to 100% of the amount paid. See Publication 535, for more information.
• Reduction of Individual Capital Gains Rates –The 10% and 20% rates on net capital gains are reduced to 5% and 15%. The decrease applies to sales and exchanges on or after May 6, 2003.
• Dividend Tax Relief for Individuals – Qualified dividends received by an individual shareholder are taxed at the same rates that apply to capital gains.
• Standard Deduction Marriage Penalty Relief –The basic standard deduction for married taxpayers filing a joint return is twice the basic standard deduction amount for single returns.
• Increase in Child Tax Credit –The $600 child tax credit has increased to $1,000.
• Lifetime Learning Credit –The amount of qualified tuition and related expenses in figuring the lifetime learning credit increases from $5,000 to $10,000. The credit will equal 20% of these expenses, with a maximum credit being $2,000.
• Death Benefit for Armed Forces –The death benefit has increased to $12,000 and is not taxable. The tax free treatment applies to deaths occurring after September 10, 2001.
• Sale of a Home by Armed Services or Foreign Service-Qualified taxpayers may suspend for up to 10 years the running of the 5-year ownership and use test. This provision applies to sales after May 6, 1997.
• Deduction for overnight travel Expenses of National Guard and Reserve Members-Qualified taxpayers may take an adjustment to income for unreimbursed overnight travel expenses.
• Department of Defense Homeowners Assistance Program- Payments made after November 11, 2003 are excludable from the income of qualified taxpayers.
• Dependent Care Assistance Programs-Benefits from a dependent care assistance program for military personnel are not taxable.
• Military Academy Expenses-The 10% tax on payments from a Qualified Tuition Program or Coverdell Education Savings Account, that are not used for educational expenses and do not exceed the cost of advance education, does not apply to attendees of the US military academies.
• Combat Zone Extensions Expanded to Contingency Operations-Automatic extensions to file and pay taxes previously granted only to members of the military or naval service in a combat zone, also apply to those serving in contingency operations.

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