TAX RELIEF FOR INDIVIDUALS AND FAMILIES
“Making Work Pay” Tax Credit. This bill cuts taxes for more than 95% of working families in the United States. For 2009 and 2010, it provides a refundable tax credit of up to $400 for working taxpayers and $800 for working families. Taxpayers receive this benefit through a reduction in the amount of income tax that is withheld from their paychecks or by claiming the credit on their tax returns. This means that the average working American will begin to receive more per paycheck beginning this Spring.
Economic Recovery Payment to Recipients of Social Security, SSI, Railroad Retirement and Veterans Disability Compensation Benefits. This provides a one-time payment of $250 to retirees, disabled individuals and SSI recipients receiving benefits from the Social Security Administration, Railroad Retirement beneficiaries and disabled veterans receiving benefits from the Department of Veterans Affairs.
Refundable Credit for Certain Federal and State Pensioners. This provides a one-time refundable credit of $250 in 2009 to certain government retirees who are not eligible for Social Security benefits. This is a one-time credit.
Increase in Earned Income Tax Credit. This temporarily increases the earned income tax credit for working families with three or more children. Under current law, working families with two or more children currently qualify for an earned income credit equal to forty percent (40%) of the family’s first $12,570 of earned income. This credit is not available to working families with adjusted gross income in excess of $16,420 ($19,540 for married couples filing jointly).
Increase Eligibility for the Refundable Portion of Child Credit. This increases the eligibility for the refundable child tax credit in 2009 and 2010. For 2008, the child tax credit is refundable to the extent of 15 percent of the taxpayer’s earned income in excess of $8,500. The bill would reduce this floor for 2009 and 2010 to $3,000.
“American Opportunity” Education Tax Credit. This provides financial assistance for those seeking a college education. For 2009 and 2010, the bill would provide taxpayers with a new “American Opportunity” tax credit of up to $2,500 of the cost of tuition and related expenses paid during the taxable year. Under this new tax credit, taxpayers will receive a tax credit based on one hundred percent (100%) of the first $2,000 of tuition and related expenses (including books) paid during the taxable year and twenty-five percent (25%) of the next $2,000 of tuition and related expenses paid during the taxable year.
Computers as Qualified Education Expenses in 529 Education Plans. This allows computers and computer technology to qualify as education expenses.
Refundable First-time Home Buyer Credit. Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10 percent of the purchase of a home (up to $7,500) by first-time home buyers. The provision applies to homes purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit are currently required to repay any amount received under this provision back to the government over 15 years in equal installments, or, if earlier, when the home is sold. The credit is not for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return).
Tax Deduction for Vehicle Purchases. This provides taxpayers with a deduction for state and local sales and excise taxes paid on the purchase of new cars, light truck, recreational vehicles, and motorcycles through 2009. This deduction is limited to taxpayers with an adjusted gross income under $125,000 ($250,000 for couples filing jointly).
Temporary Suspension of Taxation of Unemployment Benefits. This temporarily suspends federal income tax on the first $2,400 of unemployment benefits per recipient. Any unemployment benefits over $2,400 will be subject to federal income tax. This proposal is in effect for taxable year 2009.
Extension of AMT Relief for 2009. The bill would provide more than 26 million families with tax relief in 2009 by extending AMT relief for nonrefundable personal credits and increasing the AMT exemption amount to $70,950 for joint filers and $46,700 for individuals.