Lawmakers Reach Agreement on Economic Stimulus Package

On February 11, 2009, House and Senate conferees announced they had reached an agreement to scale back the massive economic stimulus package, titled the American Recovery and Reinvestment Act of 2009 (H.R. 1) to $789 billion. Many of the tax provisions were pared down to reduce the overall cost of the bill. Still approximately 35 percent of the package is allocated to tax breaks at a cost of $276 billion. The compromise legislation includes:

  1. the “Making Work Pay” individual tax credit of 6.2 of earned income up to $400 for single returns and $800 for joint filers in 2009 and 2010;
  2. a one-time stimulus payment of $250 to retirees, disabled individuals, social security recipients and disabled veterans;
  3. a temporarily increase of the earned income credit for working families with three or more children;
  4. for 2009 and 2010, a $2,500 higher education tax credit that is available for tuition and related expenses paid during the first four years of college;
  5. an extension of the first-time homebuyer credit to September 1, 2009, with the repayment obligation eliminated for 2009 purchases;
  6. for 2009, an increase in the alternative minimum tax (AMT) exemption amounts for individuals to $46,700 for unmarried individuals and $70,950 for married individuals filing joint returns;
  7. an above-the-line deduction for interest expenses and state and local taxes paid on the purchase of a new automobile;
  8. an extension of the 50-percent first-year bonus depreciation through 2009;
  9. an extension of the increased expensing limits under Code Sec. 179 to 2009; and
  10. a suspension of federal income tax on the first $2,400 of unemployment benefits per recipient in 2009.

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