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Your Share of Obama’s Stimulus Tax Breaks

February 24, 2009 | Taxes | No Comments

According to the Tax Policy Center, about 97% of American households will see tax savings as a result of President Obama’s American Recovery and Reinvestment Act signed into law last Tuesday.

The average savings would be about $1,179, however, savings will depend on income, marital status and number of children in a household.

Savings will range from a few hundred dollars to several thousand. The Recovery and Reinvestment Act contains a range of tax breaks which includes:

  • Making Work Pay credit worth up to $400 ($800 for joint filers)
  • A patch to protect middle and upper middle-income families from having to pay the Alternative Minimum Tax
  • Expansions of the earned income tax credit and the child tax credit for low-income families.
  • New credit for first-time homebuyers
  • Sales tax deduction for car buyers
  • Credit to help pay for college tuition
  • For out of work individuals receiving unemployment benefits, the first $2,400 will be tax-free.
  • Various tax breaks for small businesses


Under the new economic recovery plan, households will reduce their taxes as follows:

The government has already taken action on the broadest of the law’s cuts, the Making Work Pay. The Treasury Department has already told employers to reduce the amount of taxes withheld from paychecks by April 1, which will allow the typical family to begin taking home about $65 more per month.

First time homebuyer’s tax credit can be claimed on 2008 tax return if the home purchase occurs between January 1, 2009 and before November 30, 2009. However in many cases, households will not see any of their stimulus savings until they file their 2009 tax returns, which will be in 2010.

 

 

 

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