Senate Passes Economic Stimulus Bill 61 to 37; $366 Billion in Tax Cuts for Families and Businesses

The Senate has passed its version of the American Recovery and Reinvestment Act (H.R. 1) on February 10, 2009, by a vote of 61 to 37. The bill contains approximately $366 billion in tax relief for individuals and small businesses, and includes energy incentives and relief for state and local governments. The legislation also:

  1. provides an individual tax credit of 6.2 percent of earned income up to $500 for single returns and $1,000 for joint filers in 2009 and 2010;
  2. temporarily suspends federal income tax on the first $2,400 of unemployment benefits per recipient in 2009;
  3. creates a $2,500 higher education tax credit that is available for the first four years of college;
  4. expands the homeownership tax credit to $15,000 and allows the credit for all home purchases;
  5. establishes an above-the-line deduction for interest expenses and state and local taxes paid on the purchase of a new automobile;
  6. the alternative minimum tax (AMT) exemption amounts for individuals are increased in 2009 to $46,700 for unmarried individuals and $70,950 for married individuals filing joint returns;
  7. extends the 50-percent first-year bonus depreciation through 2009;
  8. extends the increased expensing limits under Code Sec. 179 to 2009;
  9. provides a five-year carryback of net operating losses for certain businesses;
  10. adds the categories of unemployed veterans and disadvantaged youth as qualified target groups for the Work Opportunity Tax Credit (WOTC); and
  11. allows individuals to exclude 75 percent of the gain from the sale of certain small business stock held for more than five years.

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