THE ECONOMIC STIMUL US PACKAGE OF 2009
On February 17
, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (ARRA). It is effective as of February 17
The Act includes tax cuts, expansion of
unemployment benefits, other social
welfare provisions, and domestic spending in
education, health car
e and infrastructure,
The total cost of the Act is $787 billion to be spent as follows:
37% — Tax Cuts ($288 billion)
18% — State & Local Fiscal Relief ($144 billion)
45$ — Social and Federal Spending programs ($643 billion)
Payroll tax credit of $400 per work
er ($800 per couple) in 2009 and 2010
– if your income is under $75,000 pe
r person or $150,000 per couple.
For 2009 the Alternative Minimum Ta
x floor is increased to $70,950 for
Child tax credit is expanded.
Earned income tax credit to aid low income workers is expanded.
College credit is expanded to pr
ovide a $2,500 tax credit for college
tuition for 2009 and 2010 except for couples make more than $160,000.
Homebuyer credit of $8,000 for all homes bought in from Jan 1 – Dec 1,
2009. The repayment provision is repealed fo
r homes purchased in 2009 and held more
than 3 years.
Home Energy Credit to make your
home more energy efficient in 2009
and 2010. You could recoup 30% of the cost up
to $1500 of projects such as installing
energy efficient windows, doors,
furnaces and air conditions.
The first $2,400 received in unemployment compensation benefits in 2009
will not be subject to tax.
Bonus Depreciation – Businesses bu
ying equipment such as computers
can speed up depreciation through 2009.
Money losing companies can use curren
t losses to offset profits made in
the previous 5 years inst
ead of 2, making them eligible for tax refunds.
Government agencies cannot withhold
3 % of payments to contractors to
help insure they pay their tax bills.
$13 billion is available until 2013 to
extend tax credits for renewable
Firms buying money losing banks are not permitted to use more of the
losses as tax credits to offset profits for the merged banks for tax purposes. This would
increase the taxes on merged banks.
Favorable tax treatment w
ill be given for bonds to subsidize locally issued
bonds for school construction, t
eacher training, economic devel
opment and infrastructure
Sales tax deductions are allowed fo
r persons purchasing autos unless
income is above $250,000.