Proposed Tax Cuts

The new administration wants to offer taxcuts to all Americans and businesses. The proposed tax cuts by the House include:
1. Payroll tax credit of 6.2% of earned income in 2009 and 2010 with a max of $500 for single filers and $1,000 for joint filers each year. It would be phased out for higher income filers. Congress may offer this tax credit by the end of the year.

The proposed tax cuts by the Senate include:
1. Retirees would get a one-time payment of $300

2. The remaining tax cuts are similar to the propsoed House bill

Tax cuts proposed by the House and Senate include:
1. First-time homebuyer credit of $7,500 for purchases made after 4/8/08-7/1/09 must be repaid over 15 years starting 2 years after the credit is claimed. However, if you buy a home in 2009 you don't have to pay back the credit as long as you don't sell your house within 3 years.

2. Increasing the Hope credit to $2,500 per student in 2009 and 2010 to cover college costs and would be available for all 4 years

3. Increase the earned income credit for low-income filers with 3 or more children

4. The tax credit for energy saving home improvements will increase and extend to 2010. The credit may be increased by 30% with a cap of $1,500.


Business tax cuts:
1. Revive 50% bonus first-year depreciation for assets purchased in 2009

2. Carry most or all of their losses for 5 years except for businesses that received aid from the government

3. Extending the renewable energy credits for wind, solar, biomass, and geothermal

4. Continue the higher $250,000 limit on expensing assets through 2009

5. Expand work opportunity credit to cover businesses that hire out-of-work youth between ages 16-25 or unemployed veterans