How Does the New Economic Stimulus Law Affect Your Tax Bill?

The federal economic-stimulus packaged includes tax provisions focused on cutting marginal tax rates and expanding tax incentives.  While the new tax agenda increases taxes on upper-income Americans, it also includes plenty of tax cuts.

To fund deficit-reduction and other federal projects, the new stimulus law would increase a range of taxes – which falls in line with President Obama’s pledge to cut taxes for the middle class while allowing tax cuts for the rich to expire.

Tax burdens will shift to the wealthy with the expiration of the tax cuts put in place during the Bush administration. Couples earning more than $250,000 would see the top tax rate rise to 39.6% by 2011. There also would be new limits on tax deductions, including for charitable donations.

The plan would also make permanent the payroll tax credits of up to $400 for individuals and $800 for couples that were part of the recently passed economic stimulus package.

Other tax provisions include:

  • New tax credit that provides expanded $2,500 tax credit for college expenses.
  • Capital gains taxes on small businesses would be eliminated, saving them $7 billion over 10 years.
  • Increased credit up to $1,500 a year for energy efficient home improvements.
  • Credit for first-time home buyers increased to $8,000.
  • Increase in Earned Income Tax Credit to 45% for family’s first $12,570 of earned income, or $5,656 for families with three or more children.

More Tax Help, IRS News and Tax Relief Tips:

  1. Small Business Tax Incentives and Credits in American Recovery and Reinvestment Tax Act of 2009
  2. Stop Tax Haven Abuse Bill: Preventing Offshore Tax Evasion Another Sign IRS Enforcement is on the Rise
  3. Tax Benefits for Education: Deduction of up to $4,000 Available for Tuition and Fees
  4. Senate Plans to Approve $825 Billion in Tax Cuts to Offer Tax Help to Middle Class
  5. Is there a Double Standard for Delinquent Taxpayers and Tax Cheats That Favors Powerful Individuals?

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2 Responses to “How Does the New Economic Stimulus Law Affect Your Tax Bill?”

  1. » Cracking Down on Businesses with Payroll Taxes Problems: New Economic Stimulus Plan Calls for Heightened IRS Enforcement » Tax Relief Tips from the Experts at Tax Resolution University » Blog Archive Says:

    [...] recently blogged about the new economic stimulus package and how it affects your IRS bill. In addition to funding deficit-reduction activities, the federal [...]

  2. » Tax Changes in the American Recovery and Reinvestment Act of 2009 » Tax Relief Tips from the Experts at Tax Resolution University » Blog Archive Says:

    [...] provisions of this new program as quickly as possible. I recently blogged about how this new economic stimulus law could affect your tax bill, and how heightened tax compliance efforts could impact small [...]

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