Congress has finally hammered out the final details of the sweeping $787 billion economic stimulus plan which President Obama is expected to sign into law on Tuesday. The 1,000-plus pages that make up the mammoth piece of legislation contain numerous provisions, some of which were reportedly hand-written in the final moments before being approved by both houses of Congress in the face of strident opposition from the Republican side.
Whether the unprecedented bill will have the desired effect in boosting the sputtering economy is anyone's guess. In the meantime, here's what the package has in store for many Americans. The following summary was reported on the CNNMoney.com website.
Making Work Pay Credit: The bill provides a $400 credit per
worker and a $800 credit per dual-earner couple. The full credit would
be paid to people making $75,000 or less ($150,000 per dual-earner
couple). A partial credit would be paid to those making above those
amounts but no more than $100,000 ($200,000 for couples).
The
credit would also be refundable, which means that even very low-income
families who don't make enough to owe income tax would be able to claim
it.
For most working individuals, the credit will be paid over time at roughly $15 per period, assuming 26 pay periods in a year. Estimated cost: $116 billion.
One-time payments to those who don't work: For retirees, disabled individuals and others who don't work, the bill provides a one-time $250 payment. Estimated cost: $14.2 billion.
Break for higher income families:
The bill includes a one-year provision to protect middle- and
upper-middle-income families from having to pay the Alternative Minimum
Tax. The AMT was intended primarily for high-income taxpayers but has
in recent years threatened to engulf those lower down the income scale.
Estimated cost: $70 billion.
Temporary deduction for car buyers:
The bill would let those who buy a new car, light vehicle, recreational
vehicle or motorcycle in 2009 deduct state and local sales taxes as
well as any excise tax charged in the purchase. The deduction would be
available to those earning less than $125,000 ($250,000 for joint
filers). It will be an above-the-line deduction, meaning even taxpayers
who don't itemize may take it in addition to the standard deduction. Estimated cost: $1.7 billion.
Temporary credit for home buyers:
The bill increases the size of an existing temporary and refundable
first-time home buyer credit to $8,000, up from $7,500. It also removes
the requirement under current law that the credit be paid back if the
buyer stays in the home for at least three years. And it would extend
the credit's expiration date to Dec. 1, 2009, from July 1. Those
eligible for this credit must have purchased a home after Jan. 1, 2009,
and before Dec. 1, 2009.
The full credit is available to those making $75,000 or less ($150,000 for joint filers). Estimated cost: $6.6 billion.
New temporary college credit:
The bill introduces the American Opportunity Tax Credit, which would be
in effect for 2009 and 2010. It expands the existing Hope Scholarship
tax credit and would be worth as much as $2,500 for higher education
expenses, up from $1,800 currently.
The full credit would be
available to those making less than $80,000 ($160,000 for joint
filers). Those making between those amounts and $90,000 ($180,000 for
joint filers) would get a partial credit. And the break would also be
partially refundable, meaning lower income families with little or no
tax liability could now claim some of the credit. Estimated cost: $13.9 billion.
Temporary Pell Grant increase: The bill increases the maximum Pell Grant by $500 to $5,350 in 2009 and $5,550 in 2010. Estimated cost: $15.6 billion.
Temporary expansion of child tax credit:
The bill increases eligibility for the child tax credit by lowering the
income threshold that must be met for the credit to be refundable. The
threshold would be lowered to $3,000 for this year and next. That will allow lower income families to claim more of the credit than under current law. Estimated cost: $14.8 billion.
Temporary increase in earned income tax credit:
The credit will be temporarily increased to 45% from 40% of qualifying
earnings for low-income families with three or more children. It also
includes a marriage penalty relief provision for couples who qualify
for at least a portion of the credit. Estimated cost: $4.6 billion.
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