text: SECTION 1. SHORT TITLE.
  
      (a) Short Title.--This Act may be cited as the ``Individual Income 
  Tax Rate Reduction Act of 2001''.
      (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 this Act shall 
  be treated as a change in a rate of tax for purposes of section 15 of 
  such Code.
  
  SEC. 2. REDUCTION IN INDIVIDUAL INCOME TAX RATES.
  
      (a) Rates for 2001.--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 every 
  married individual (as defined in section 7703) who makes a single 
  return jointly with his spouse under section 6013, and 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 $45,200...............
                                          12% of taxable income.
      Over $45,200 but not over 
          $109,250.
                                          $5,424, plus 25% of the excess 
                                                  over $45,200
      Over $109,250 but not over 
          $166,500.
                                          $21,436.50, plus 28% of the 
                                                  excess over $109,250
      Over $166,500 but not over 
          $297,350.
                                          $37,466.50, plus 35.5% of the 
                                                  excess over $166,500
      Over $297,350..................
                                          $83,918.25, plus 38.2% of the 
                                                  excess over $297,350
      ``(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 $36,250...............
                                          12% of taxable income.
      Over $36,250 but not over 
          $93,650.
                                          $4,350, plus 25% of the excess 
                                                  over $36,250
      Over $93,650 but not over 
          $151,650.
                                          $18,700, plus 28% of the excess 
                                                  over $93,650
      Over $151,650 but not over 
          $297,350.
                                          $34,940, plus 35.5% of the 
                                                  excess over $151,650
      Over $297,350..................
                                          $86,663.50, plus 38.2% of the 
                                                  excess over $297,350
      ``(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 $27,050...............
                                          12% of taxable income.
      Over $27,050 but not over 
          $65,550.
                                          $3,246, plus 25% of the excess 
                                                  over $27,050
      Over $65,550 but not over 
          $136,750.
                                          $12,871, plus 28% of the excess 
                                                  over $65,550
      Over $136,750 but not over 
          $297,350.
                                          $32,807, plus 35.5% of the 
                                                  excess over $136,750
      Over $297,350..................
                                          $89,820, plus 38.2% of the 
                                                  excess over $297,350
      ``(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 $22,600...............
                                          12% of taxable income.
      Over $22,600 but not over 
          $54,625.
                                          $2,712, plus 25% of the excess 
                                                  over $22,600
      Over $54,625 but not over 
          $83,250.
                                          $10,718.25, plus 28% of the 
                                                  excess over $54,625
      Over $83,250 but not over 
          $148,675.
                                          $18,733.25, plus 35.5% of the 
                                                  excess over $83,250
      Over $148,675..................
                                          $41,959.12, plus 38.2% of the 
                                                  excess over $148,675
      ``(e) Estates and Trusts.--There is hereby imposed on the taxable 
  income of every estate, and every trust, taxable under this subsection 
  a tax determined in accordance with the following table:
  
  ``If taxable income is:             The tax is:
      Not over $1,800................
                                          12% of taxable income.
      Over $1,800 but not over $4,250
                                          $216, plus 25% of the excess 
                                                  over $1,800
      Over $4,250 but not over $6,500
                                          $828.50, plus 28% of the excess 
                                                  over $4,250
      Over $6,500 but not over $8,900
                                          $1,458.50, plus 35.5% of the 
                                                  excess over $6,500
      Over $8,900....................
                                          $2,310.50, plus 38.2% of the 
                                                  excess over $8,900''
      (b) Rate Reductions After 2001.--Section 1 is amended by adding at 
  the end the following new subsection:
      ``(i) Rate Reductions After 2001.--
              ``(1) In general.--In the case of taxable years beginning 
          in a calendar year after 2001, the corresponding percentage 
          specified for such calendar year in the following table shall 
  be substituted for the otherwise applicable tax rate.
  
  
  ------------------------------------------------------------------------
                                                      The corresponding
                                                    percentages shall  be
  In the case of taxable years  beginning during     substituted for the
                  calendar year:                   following percentages:
                                                 -------------------------
                                                     35.5%        38.2%
  ------------------------------------------------------------------------
  2002..........................................     35.0%        37.0%
  2003..........................................     34.5%        35.8%
  2004..........................................     34.0%        34.6%
  2005..........................................     33.5%        33.5%
  2006 and thereafter...........................     33.0%        33.0%
  ------------------------------------------------------------------------
  
              ``(2) Adjustment of tables.--The Secretary shall adjust the 
          tables prescribed under subsection (f) to carry out the 
          reductions under this subsection.''
      (c) Inflation Adjustment To Apply After 2001.--Subsection (f) of 
  section 1 is amended--
              (1) by striking ``1993'' in paragraph (1) and inserting 
          ``2001'', and
              (2) by striking ``1992'' in paragraph (3)(B) and inserting 
          ``2000''.
      (d) Conforming Amendments.--
              (1) The following provisions are each amended by striking 
          ``1992'' and inserting ``2000'' each place it appears:
                      (A) Section 32(j)(1)(B).
                      (B) Section 41(e)(5)(C).
                      (C) Section 42(h)(3)(H)(i)(II).
                      (D) Section 59(j)(2)(B).
                      (E) Section 63(c)(4)(B).
                      (F) Section 68(b)(2)(B).
                      (G) Section 132(f)(6)(A)(ii).
                      (H) Section 135(b)(2)(B)(ii).
                      (I) Section 146(d)(2)(B).
                      (J) Section 151(d)(4).
                      (K) Section 220(g)(2).
                      (L) Section 221(g)(1)(B).
                      (M) Section 512(d)(2)(B).
                      (N) Section 513(h)(2)(C)(ii).
                      (O) Section 685(c)(3)(B).
                      (P) Section 877(a)(2).
                      (Q) Section 911(b)(2)(D)(ii)(II).
                      (R) Section 2032A(a)(3)(B).
                      (S) Section 2503(b)(2)(B).
                      (T) Section 2631(c)(2).
                      (U) Section 4001(e)(1)(B).
                      (V) Section 4261(e)(4)(A)(ii).
                      (W) Section 6039F(d).
                      (X) Section 6323(i)(4)(B).
                      (Y) Section 6334(g)(1)(B).
                      (Z) Section 6601(j)(3)(B).
                      (AA) Section 7430(c)(1).
              (2) Sections 25A(h)(1)(A)(ii) and 25A(h)(2)(A)(ii) are each 
          amended by striking ``begins,'' and all that follows through 
          ``thereof''.
              (3) Subclause (II) of section 42(h)(6)(G)(i) is amended by 
          striking ``1987'' and inserting ``2000''.
      (e) Additional Conforming Amendments.--
              (1) Subparagraph (B) of section 1(g)(7) is amended--
                      (A) by striking ``15 percent'' in clause (ii)(II) 
                  and inserting ``the first bracket percentage'', and
                      (B) by adding at the end the following flush 
                  sentence:
                  ``For purposes of clause (ii), the first bracket 
                  percentage is the percentage applicable to the lowest 
                  income bracket in the table under subsection (c).''
              (2) Section 1(h) is amended--
                      (A) by striking ``28 percent'' both places it 
                  appears in paragraphs (1)(A)(ii)(I) and (1)(B)(i) and 
                  inserting ``25 percent'', and
                      (B) by striking paragraph (13).
              (3) Section 15 is amended by adding at the end the 
          following new subsection:
      ``(f) Rate Reductions Enacted by Individual Income Tax Rate 
  Reduction Act of 2001.--This section shall not apply to any change in 
  rates under subsection (i) of section 1 (relating to rate reductions 
  after 2000).''
              (4) Section 531 is amended by striking ``equal to'' and all 
          that follows and inserting ``equal to the product of the 
          highest rate of tax under section 1(c) and the accumulated 
          taxable income.''.
              (5) Section 541 of such Code is amended by striking ``equal 
          to'' and all that follows and inserting ``equal to the product 
          of the highest rate of tax under section 1(c) and the 
          undistributed personal holding company income.''.
              (6) Section 3402(p)(1)(B) is amended by striking ``7, 15, 
          28, or 31 percent'' and inserting ``7 percent, any percentage 
          applicable to any of the 3 lowest income brackets in the table 
          under section 1(c),''.
              (7) Section 3402(p)(2) is amended by striking ``equal to 15 
          percent of such payment'' and inserting ``equal to the product 
          of the lowest rate of tax under section 1(c) and such 
          payment''.
              (8) Section 3402(q)(1) is amended by striking ``equal to 28 
          percent of such payment'' and inserting ``equal to the product 
  of the third to the lowest rate of tax under section 1(c) and such 
  payment''.
              (9) Section 3402(r)(3) is amended by striking ``31 
          percent'' and inserting ``the third to the lowest rate of tax 
          under section 1(c)''.
              (10) Section 3406(a)(1) is amended by striking ``equal to 
          31 percent of such payment'' and inserting ``equal to the 
          product of the third to the lowest rate of tax under section 
          1(c) and such payment''.
              (11) Section 13273 of the Revenue Reconciliation Act of 
          1993 is amended by striking ``28 percent'' and inserting ``the 
          third to the lowest rate of tax under section 1(c) of the 
          Internal Revenue Code of 1986''.
      (f) Effective Dates.--
              (1) In general.--Except as provided in paragraph (2), the 
          amendments made by this section shall apply to taxable years 
          beginning after December 31, 2000.
              (2) Amendments to withholding provisions.--The amendments 
          made by paragraphs (6), (7), (8), (9), (10), and (11) of 
          subsection (e) shall apply to amounts paid after the date of 
          the enactment of this Act.
  
  SEC. 3. INCREASE IN STANDARD DEDUCTION.
  
      (a) In General.--Paragraph (2) of section 63(c) (relating to 
  standard deduction) is amended to read as follows:
              ``(2) Basic standard deduction.--For purposes of paragraph 
          (1), the basic standard deduction is--
                      ``(A) twice the dollar amount in effect under 
                  subparagraph (C) for the taxable year in the case of--
                              ``(i) a joint return, or
                              ``(ii) a surviving spouse (as defined in 
                          section 2(a)),
                      ``(B) $8,500 in the case of a head of household (as 
                  defined in section 2(b)), or
                      ``(C) $6,000 in any other case.''
      (c) Technical Amendments.--
              (1) Paragraph (4) of section 63(c) is amended to read as 
          follows:
              ``(4) Adjustments for inflation.--
                      ``(A) In general.--In the case of any taxable year 
                  beginning in a calendar year after 1988, each dollar 
                  amount contained in paragraph (2) or (5) or subsection 
                  (f) shall be increased by an amount equal to--
                              ``(i) such dollar amount, multiplied by
                              ``(ii) the cost-of-living adjustment 
                          determined under section 1(f)(3) for the 
                          calendar year in which the taxable year begins.
                  The preceding sentence shall not apply to the amount 
                  referred to in paragraph (2)(A).
                      ``(B) Base period adjustments.--In determining the 
                  adjustment under subparagraph (A), section 1(f)(3) 
                  shall be applied by substituting for `calendar year 
                  1992' in subparagraph (B) thereof--
                              ``(i) `calendar year 1987' in the case of 
                          the dollar amount contained in paragraph (5)(A) 
                          or subsection (f),
                              ``(ii) `calendar year 1997' in the case of 
                          the dollar amount contained in paragraph 
                          (5)(B)'', and
                              ``(iii) `calendar year 2000' in the case of 
                          the dollar amounts contained in paragraph 
                          (2).''
              (2) Subparagraph (B) of section 1(f)(6) is amended by 
          striking ``subsection (c)(4) of section 63 (as it applies to 
          subsections (c)(5)(A) and (f) of such section)'' and inserting 
          ``section 63(c)(4)''.
      (d) Effective Date.--The amendments made by this section shall 
  apply to taxable years beginning after December 31, 2000.
target: Individual Income Tax Rate Reduction Act of 2001 - Amends the Internal Revenue Code to establish new, lower tax rates for individuals. Increases the standard deduction and provides that such deduction on a joint return shall be twice the amount of a single return.
feat_title: To amend the Internal Revenue Code of 1986 to reduce individual income tax rates and increase the standard deduction.