Feb 17 The $787 billion U.S. economic stimulus
package contains about $287 billion in tax cuts, according to
the latest congressional calculations on the value of the
package and its impact on U.S. budget deficits.
President Barack Obama signed the bill on Tuesday, saying
he wants quick action to boost the struggling economy.
Here are some of the major tax provisions in the bill:
FOR WORKERS, CONSUMERS AND RETIREES
* A "making work pay" refundable tax credit championed by
Obama of up to $400 per individual and $800 for couples in 2009
and 2010. It is calculated at a rate of 6.2 percent of earned
income and is phased out for individuals with adjusted incomes
over $75,000 and couples with incomes over $150,000.
* A one-time payment of $250 to Social Security
beneficiaries, railroad retirees and veterans receiving
benefits from the Department of Veterans Affairs. State
government retirees not eligible for Social Security would also
get the $250 payment.
* Increases the earned income tax credit for low-income
workers with three or more children.
* Increases eligibility for the refundable child tax credit
to more low-income workers. The bill reduces the income floor
to $3,000 in 2009 and 2010 from the current floor of $8,500.
* A new $2,500 tax credit for college education expenses.
The credit phases out for individuals earning more than $80,000
and couples with incomes over $160,000.
* An $8,000 tax credit for first-time home buyers for homes
purchased between Jan. 1 and Dec. 1, 2009. The tax credit
phases out for individuals earning more than $75,000 and
couples earning more than $150,000.
* Temporary relief from the alternative minimum tax for
millions of middle-class taxpayers who otherwise would be
ensnared by the tax originally meant for the very wealthy.
* Small businesses with gross receipts of up to $15 million
can write off 2008 losses against five previous tax years.
Current laws allows a two-year carryback of losses.
Businesses will also be allowed to immediately write off
more of their investments in computers and other equipment.
* Businesses that repurchase debt at a lower amount than
when it was issued will be able to defer taxes on it. Usually
reduced or canceled debt is treated as income and taxed. The
break applies to debt repurchased adjusted after Dec. 31, 2008,
and before Jan. 1, 2011.
* A tax break on capital gains from the sale of stock held
in a small business for more than five years.
* The bill raises about $7 billion in revenues by repealing
a Treasury Department decision last year to liberalize rules
that were intended to prevent companies in a merger from taking
huge tax breaks on losses of firms they were acquiring.
FOR STATE AND LOCAL GOVERNMENTS
* Creates a new category of tax-preferred bonds for
investment in economic recovery zones for job training,
education and economic development.
* Creates a new category of tax-preferred bonds for the
construction, and repair of public schools and the purchase of
land for schools.
* Creates a federal subsidy for state and local governments
offering bonds that give investors credits against their
federal taxes in place of interest payments.
FOR RENEWABLE ENERGY
* Extends tax breaks for wind facilities and other
renewable energy facilities and provides other tax incentives
to encourage development of renewable energy facilities.
* Authorizes an additional $1.6 billion of new clean
renewable energy bonds as well as $2.4 billion of energy
conservation bonds to finance state and local government
projects to reduce greenhouse gas emissions.
* Extends tax credits for energy-efficient improvements to
* Provides a tax credit for purchase of "plug-in" electric
vehicles of at least $2,500. The credit is increased depending
on the battery capacity of the car purchased.
* Provides a new 30 percent investment tax credit for
facilities engaged in producing renewable energy technology and
(Editing by Peter Cooney and David Wiessler)