Individuals
The U.S. Economic Stimulus package was signed into law on February 17, 2009 by President Barack Obama. This $789 billion plan contains many ways to help individuals save money, by offering $282 billion in tax cuts.
$116.2 billion:
A new tax credit for workers will provide a tax credit at a rate of 6.2 percent of earned income (after federal taxes have been taken out), up to $400 for individuals and $800 for couples in 2009 and 2010. For individuals the tax credit begins to phase out at income levels of $75,000 and $150,000 for married couples who file jointly. Seeing that the credit is ÒrefundableÓ, people who have no federal income-tax liability will get money back.
$69.8 billion:
The alternative minimum tax was originally aimed at the very wealthy, but has begun to affect middle income families because it has not been adjusted for inflation. Each year Congress creates a temporary fix to help millions of people from paying the alternative minimum tax. Up to $46,700 of an individualÕs income from the A.M.T. (alternative minimum tax) and $70,950 of a coupleÕs income from the A.M.T. are exempt in 2009. This allows the use of refundable personal credits to avoid the alternative minimum tax.
$14.8 billion:
Expanding eligibility for Child Tax Credit, will allow households making at least $3,000 to subtract $1,000 from their tax bill per child in 2009 and 2010. Under the current law, the tax credit does not apply to families that have incomes less than $12,550.
$13.9 billion:
Expanding the Federal Hope scholarship for 2009 and 2010 will provide a tax credit up to $2,500 a year for all four years of a college tuition, instead of the current $1,800 a year for the first two years. The credit would also be 40% refundable and cover costs of textbooks. The tax credit would not apply to individuals making $80,000 to $90,000 and couples earning between $160,000 and $180,000.
$6.6 billion:
A refundable tax credit for first time home buyers of up to $8,000, up $500 from the original credit enacted last year. Purchases must be made by December 1 this year to qualify for the credit. The credit phases out single tax payers whose adjusted gross income exceeds $75,000, or $150,000 for married couples. If the buyer sells the house within the first three years, they will forfeit the credit.
$4.7 billion:
The Earned Income Tax Credit will be increased from 40% to 45% of the first $12,570 earned by families that have more than three children in 2009 and 2010.
$2.0 billion:
Tax credits will increase for purchases to make homes more energy efficient, such as new furnaces or new insulation. The increase will be 30% through 2010, for up to $1,500.
$2.0 billion:
The tax credit will be increased to $7,500 for those who purchase plug-in hybrid vehicles.
$1.7 billion:
Those who purchase a car in 2009, up to $49,500 will be able to deduct state, local and excise taxes, as well as interest on their car loans. This tax break is an above-the-line deduction, meaning that it can be taken by those who do not itemize other deductions on their tax returns. This tax cut phases for those tax filers who make more than $125,000 (for individuals) and $250,000 for married couples that file joint taxes.
$268 million:
For residential renewable energy properties: the dollar caps on the 30% residential credit for solar thermal, geothermal, and small wind property.
$192 million:
Due to inflation, the tax free commuter benefits provided by employers for transit and parking will increase to $230 a month for 2009. Currently only $120 of the mass transit benefit and $230 of the parking is tax free.
In addition to the tax cuts listed above, the government is also providing economic relief through federally funded programs as part of the Federal Stimulus plan. These programs include:
- Debt consolidation to help lower interest payments on outstanding debt
- Mortgage assistance to prevent foreclosure
- Mortgage refinancing to lower mortgage payments
- Access to free credit reports
- Free government grants