Tax Reduction Act of 1981

Tax Reduction Act of 1981 - Amends the Internal Revenue Code to reduce individual income tax rates. Increases the zero bracket amount (formerly, the standard deduction) for individual taxpayers.

Allows a refundable income tax credit equal to ten percent of the social security taxes paid by employers, employees, and self-employed individuals during the taxable year.

Reduces corporate income tax rates.

Allows an income tax credit for research and experimental expenditures paid or incurred in a taxpayer's trade or business equal to ten percent of the excess of 2.5 percent of the gross receipts of such trade or business for the taxable year.

Provides for a taxpayer election of a useful life for small business depreciable assets which does not vary from established class life guidelines by more than 20 percent. Permits the salvage value of a small business depreciable asset to be disregarded.

Raises the allowable amount of equity capital of a small business corporation which issues stock eligible for ordinary loss treatment from $1,000,000 to $2,000,000.