Your Share of Stimulus Tax Breaks - KCBD NewsChannel 11 Lubbock

2/24/09

Your Share of Stimulus Tax Breaks

A study of the recovery plan shows most households will qualify for a tax break. Boost for some could be worth several hundred to several thousand dollars.

Roughly 97% of American households could see tax savings as a result of the American Recovery and Reinvestment Act, according to a new analysis by a nonpartisan research group.

The Tax Policy Center crunched the numbers and concluded that the average savings would be $1,179. But how much a household actually gets depends on income, marital status and whether a filer has children. The savings range from a few hundred dollars to several thousand.

The law, which President Obama signed on Tuesday, contains a range of tax breaks for individuals. Those likely to affect the greatest number of households are the new Making Work Pay credit worth up to $400 ($800 for joint filers); a patch to protect middle- and upper-middle-income families from having to pay the Alternative Minimum Tax; and expansions of the earned income tax credit and the child tax credit for low-income families.

There are also breaks that address specific situations: a new credit for first-time home buyers, a sales tax deduction for car buyers and a new credit to help pay for college tuition. For people receiving unemployment benefits, the first $2,400 will be tax free.

On Saturday, Obama said the government had already taken action on the broadest of the law's cuts -- the Making Work Pay.

The Treasury Department has told employers to reduce the amount of taxes withheld from paychecks by April 1. Treasury estimates that a typical family will begin taking home about $65 more per month, according to Obama.

"Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans," Obama said in his weekly video and radio address.

In addition, the economic recovery plan contains a host of tax breaks for small businesses.

The Tax Policy Center used a representative sampling of all tax filers and non-filers, including information on their income, their spending and their demographics. And then they applied the various tax provisions for which those in the sample pool qualify.

Some Tax-Saving Scenarios

A single person with no children making between $20,000 and $30,000 would see a 12.5% reduction in his or her tax liability for an annual savings of $453. The same person making between $50,000 and $75,000 would see a 4.6% drop, or $626.

Tax Savings
How households may fare under the economic recovery plan.
Income Avg. Tax Savings Drop in Tax Bite
Under $19K $476 -95%
$19K-$38K $652 -22%
$38K-$66K $781 -9%
$66K-$112K $1,301 -7.5%
$112K-$161K $2,549 -8.3%
$161K-$227K $3,883 -8.3%
$227K-$603K $5,133 -5.7%
$2.8M plus $39,350 -1.4%
Source: The Tax Policy Center

At the upper income ranges, someone with income between $100,000 and $200,000 would see a 2.1% drop, which translates into $706.

With or without kids, a married couple filing jointly making between $50,000 and $75,000 could see a 10.5% drop for a savings of $991. Those making between $75,000 and $100,000 would see their tax liability go down 9.1%, or $1,457.

Couples with very high incomes -- between $200,000 to $500,000 -- could see a 7.5% decline in their tax bill, or $5,645.

Households with children, regardless of the parent's marital status, would see savings on their tax bill averaging 9.7% of their tax liability, or $1,975.

When You'll See Savings

The first tax credit filers will enjoy is the Making Work Pay credit, which will show up in increments in people's paychecks starting in April.

In some instances, such as with the first time home buyer's tax credit, the money can be claimed on one's 2008 tax return if the home purchase occurs between Jan. 1 and before Nov. 30 of this year.

But in many cases, a household won't see some of their stimulus savings until they file their 2009 returns, which they can't do until 2010.

Of course what filers' save on their federal taxes under stimulus may be muted by the fact that their cities and states -- facing steep budget shortfalls that will be lessened but not eliminated by stimulus funding -- may end up raising taxes and fees.

Copyrighted, CNNMoney. All Rights Reserved.
  • Local News on KCBD.comNewsMore>>

  • Police: Multiple shooters kill 1, injure 15 in Cincinnati following fight

    Police: Multiple shooters kill 1, injure 15 in Cincinnati following fight

    Sunday, March 26 2017 5:46 AM EDT2017-03-26 09:46:59 GMT
    Sunday, March 26 2017 1:28 PM EDT2017-03-26 17:28:49 GMT

    One person was killed and another 14 injured in a mass shooting at a Cincinnati nightclub early Sunday morning.

    One person was killed and another 14 injured in a mass shooting at a Cincinnati nightclub early Sunday morning.

  • Fire Weather Warning for this afternoon

    Fire Weather Warning for this afternoon

    Sunday, March 26 2017 10:33 AM EDT2017-03-26 14:33:36 GMT
    Sunday, March 26 2017 10:33 AM EDT2017-03-26 14:33:36 GMT
    The South Plains has been placed under a Fire Weather Warning valid from this afternoon at 1 p.m. until 8 p.m. this evening. Sustained winds at 20-30 mph, warm temperatures and low relative humidity values will create an elevated to critical fire weather risk for our area. A cold front will move through our area late tonight, shifting winds out of the north. Monday morning will be cool and breezy.
    The South Plains has been placed under a Fire Weather Warning valid from this afternoon at 1 p.m. until 8 p.m. this evening. Sustained winds at 20-30 mph, warm temperatures and low relative humidity values will create an elevated to critical fire weather risk for our area. A cold front will move through our area late tonight, shifting winds out of the north. Monday morning will be cool and breezy.
  • DC eagle cam: Eggs expected to hatch soon

    DC eagle cam: Eggs expected to hatch soon

    Sunday, March 26 2017 9:07 AM EDT2017-03-26 13:07:03 GMT
    Sunday, March 26 2017 9:07 AM EDT2017-03-26 13:07:02 GMT

    Eagle eggs typically take 35-38 days to hatch, and Sunday marks Day 35 for the first of the two eggs.

    Eagle eggs typically take 35-38 days to hatch, and Sunday marks Day 35 for the first of the two eggs.

Powered by Frankly