In case you haven’t had a chance to read the 1000+ page stimulus bill that was passed on Friday, Ron Lieber at the New York Times has highlighted some of the provisions that will directly affect the average American.
Here’s our summary of what Lieber has put together, supplemented with more details from the Associated Press:
- Tax credit of up to $400 for individuals, $800 for couples for 2009 and 2010. Figure your individual credit by taking 6.2% of your earned income. Note that your employer can adjust your withholdings so that the credit is returned to you over the year instead of all at once. The Associated Press says most people will see this in the form of a $13 bump in weekly paychecks starting in June, and dropping to about $7.70 a week for the duration of 2010.
- The $1000 child tax credit will be extended to more families, and if you’re a poor family with three or more kids, you’ll get an expanded Earned Income Tax Credit.
- No tax on the first $2400 of unemployment you receive in 2009.
- The government will subsidize up to 65% of your premium for Cobra coverage if you lost your job after Sep 1st, 2008. If you declined Cobra, you’ll have 60 days to reconsider.
- $87 billion is going to help states administer Medicaid, which the AP notes “could slow or reverse some of the steps states have taken to cut the program.”
- If you get food stamps, you’ll get more.
- If you’re drawing unemployment, expect to see $25 more per check, and the duration of the benefits has been extended.
- If you receive Social Security payments, you’ll see a one-time extra payment of $250.
- If you buy a new car, light truck, recreational vehicle or motorcycle in 2009, you’ll be able to deduct the state and local taxes you paid on it.
- If you add energy-efficient doodads to your home this year, you can get a tax credit to cover 30% of the costs, up to $1500.
- Pell Grants will increase slightly.
- The “Higher Education Tax Credit” will refund “up to $2,500 of the cost of college tuition and other related expenses in 2009 and 2010. You’ll need to spend at least $4,000 in a single year to get the full credit.”
- You can use withdrawals from a 529 college savings plan to cover computers and related technology and services for the first time in 2009 and 2010.
- First time home buyers who buy between January 1-December 1 2009 will receive a refundable tax credit of up to $8000, figured by taking 10% of the purchase price of your home. The credit doesn’t have to be repaid, but you do have to keep the home for at least 3 years.
- The amount of pre-tax income you can set aside through your employer for public transit will increase to $230 a month (equivalent to what you can set aside if you drive).
- The Alternative Minimum Tax has been set aside for another year.
- $3.7 billion will go to local police programs, mostly for hiring new officers.
Many of these tax credits fade out if you make over $75,000 annually, or $150,000 as a couple.
“What’s in the Bill for You” [New York Times]
“How the economic stimulus plan could affect you” [Associated Press]
RELATED
Read the stimulus bill and leave your comments on it at whitehouse.gov
(Photo: Jeff Sandquist)
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Stimulus package? It sounds more like a severance package.
looks like there’s still very little in there for single childless people who don’t own a home or want to make a large purchase this year and next year. Figures…
@hipersons: the person you described contributes much less to the economy than a married person with kids who own a home or plan to buy one in the next year. It only makes since to encourage those people to “stimulate” the econ, by buying things.
@hipersons:
There’s very little in it for single childless people who already own a home and don’t want to make a large purchase this year or next year anyway, either.
How does the gubmint address self-employed or unemployed people for the tax credit (bullet point #1)? I’m an independent contractor, so no withholding. Does that mean no $400 for me, or will I claim in on my 2009 and 2010 returns? The spouse has been unemployed for two months now with no end in sight. Wondering how the tax credit will work for him. Will def be happy with the extra $$ in his weekly checks. Unemployment’s over 10% in our county now–every little bit helps!
Thanks, Chris. Very nice summary!
The post does not mention AGI limits for the benefits.
To summarize – If you’re a productive member of society who worked hard to make something of yourself…then you get nothing…except the opportunity to have your taxes raised in a couple years and all your savings eroded by inflation.
Hooray for Change!!!
I just spent billions on a bunch of worthless mortgages. What do I get?
None of this applies to me.
I was receiving U.E. benefits but that ran out about a month ago (from out of state..good luck trying to get a hold of them either online of by telephone).
I have literally no income (other than the little bit of $ the parental units throw my way).
Sigh.
Some of the comments being posted are really insensitive. Trust me… I was one of you guys until about 6 months ago. My daycare provider lost her home to foreclosure forcing me to pay an extra $800 a month for daycare… thus forcing ME into foreclosure. Then to make matters worse I moved down to South Carolina in September to take a higher paying job only to be laid off in January. For the first time in 15 years, I’m without work.
I’m an IT Specialist and the only jobs that are being offered for my experience level are working as a CNA or a peach picker… literally… that’s what I was offered by the state of South Carolina. I have a B.S. degree in Marketing and still can’t find work that pays over $$9.50 an hour! The tax credit for higher education would be a life-saver.
$15 a paycheck is an extra bill being paid. BTW… is that weekly? $800 divided by 52 weeks is roughly about $15 minus the taxes.
No tax on the first $2400 of unemployment you receive in 2009? Wonderful for the millions of the recently unemployed people like myself. $25 more a paycheck from unemployment is a god-send for us! Since it’s weekly that adds up to an extra $100 a month! That’s groceries for a month for a three people home!
I thought that the stimulus plan was a bunch of garbage also until I realized what it has the potential to do. It gets people to start buying houses again, supports environmental consciousness, subsidizes COBRA coverage for people who lost their insurance, and greatly assists recently unemployed people such as myself until we can get back on our feet.
What did Bush do to stimulate the economy? Everyone with a pulse got a new HDTV or saved it. Yeah… the 120Hz HDTV stimulated a lot of people. LOL.
People have such cynical views on things until it happens to them… Yeah… knock on wood because your job might be next.
@hectordejesus: That’s a really good post. Thanks a lot for sharing – it’s very instructive. And, good luck!
@hectordejesus:
That was well said and reasoned. Thus, no one will listen. It is the way of the internet it seems.
@hectordejesus: Great post. Good luck finding work.
BTW… I see that we have a lot of talking heads from FOX News posting on the topic. I guess I should mention that the title of the article was “What the Stimulus Bill Has For Everyday Americans”… not “What the Stimulus Bill Has For You”.
Judging from the ever increasing unemployment rate and more pending lay-offs around the corner, I’ hold my tongue until we get out of this mess.
Oh and BTW… I voted for Obama and I also have a pessimistic view on if anything is going to work at this point in time. But, it’s better to spend massive amounts of money to try to get out of the mess than to just follow the same course of inaction and fail miserably… oh wait… was I talking about the economy or the war in Iraq?
Wait, so I give the government money so they can give it back? But I don’t get as much back as I give? Where is this a good idea and where does it stimulate the economy? It sounds like a federal worker stimulus package to me.
@ahow628: 90% of the jobs created by the stimulus is going to be in the private sector. 3.5 million jobs created will indeed stimulate the economy.
The above still needs to be worked through in the case of special circumstances (eg living jointly where only one person is eligible) etc and for SSA recepients. This article has more details on the home buyer credit: [www.savingtoinvest.com] , but until the IRS makes detailed rulings there will still be many open questions.
Trying to understand the first item…Is this $13 a reduction in the amount of Federal taxes taken out of my paycheck, and if so, do I have to take it every paycheck? What I’d rather do is continue to have it withheld and collect an extra $650 or so at tax-time. (I think the gov’t would rather have me do that too, since it will actually get spent on something that way, rather than put in the gas tank or tacked onto the grocery bill.)
Thankfully the IRS has just about the BEST website and telephone customer-service you’re ever likely to see. (Strange fact I discovered when I had to deal with them over a big issue recently. But it’s true! They’re *astonishingly* organized, and quite friendly too, as long as you don’t owe them $$.) Think I’ll wait until after things settle down a little bit and give them a call.
Thanks for the useful list. I’m excited about the energy upgrades for government buildings, and some of the public transportation projects (though I wish there were a lot more of those…NATIONWIDE LIGHT RAIL, dammit!) …but we’ll see. Stuff like this is always touch-and-go.
@Mary Marsala with Fries: You can always submit a new W-4 to whomever processes your payroll, doing one of two things:
a) Claim fewer allowances and/or (if applicable) change the status from Married to Single;
b) Claim the same status and allowances, BUT also specify a specific additional amount of Federal Income Tax to be withheld (Box 6 of the W-4)
Once the final language of the stimulus package is set and signed into law, the tax withholding calculations will be updated by the IRS. At that point, you’ll be able to go to a website like http://www.paycheckcity.com to play with different W-4 scenarios, and see what you can submit on your W-4 to have the same amount withheld from each paycheck as before.
So if you’re already living high off the government horse (i.e. food stamps, welfare, etc.), you’ll further be “compensated”.
If you’re a hard-working American, you’ll get $13 extra per week and increased college credit for an institution dramatically raising their tuition rates.
I took the $7500 credit last year and have to pay it back. I think I’ll pull a Timothy Geith (Geithner?) and say I didn’t know I had to pay it back…
looks like you can’t give people free stuff without criticism, get over it, a lot of stuff on this list will create new jobs and put more money in your pocket. Not the bastards who make 200K/yr.
TAX BREAKS AREN’T WORKING.
let’s move on…
also stop saying the word recession, you’re just making it worse.
Pick up and move on…
I say screw the banks and get all that money they got given back and take even more from them, then give every single taxpayer/social services user/homeless person you name it about 25,000$ apiece. tell me thats not gonna stimulate the economy a little instead of the idiot fat cats who are hoarding the 800 billion they got last year…….a long time ago someone said “kill the Rich, I say we amend it to Kill the bankers and the politicians, (who are really the rich i guess after all….)
This is awesome! 400.00 for a single tax deduction and all I have to do is put future generations in a mountain of debt or otherwise destroy their finacial future! Gooooooooo Porkulus!
Seems like more of an infrastructure stimulus rather than an economic stimulus to me. Maybe it’s because I’m only seeing the $800 tax cut. My elderly MIL however is dependent on Medicaid to pay her nursing home bill (and yes she needs to be there, it’s not just us dumping her there), so that part of the package is something I am grateful for.
In other words, if you are a regular 2-income household with one or more kids, living paycheck to paycheck, and make sacrifices to pay what bills you do have on time, you get nothing. In fact, you will have MORE money taken from you to bail out others who made bad decisions, potentially leaving you unable to meet obligations that you were just scraping by to meet.
Thanks for nothing. How about we stopping rewarding people for failing and start helping people who actually live responsibly and help themselves??
$13 bump in weekly pay?
Way to boost the economy, Congress.
…so basically for the average american – none of these stimulus items is going to do us squat.
All of this means diddly-squat to individuals. We were sold a bill of goods with the promise that it’s going to help ordinary Americans. Bulldinkey. The whole purpose of this is to balloon things the government will need to spend money on now and in the future. Infrastructure, you say? Crock of beans. Most of those projects will never come in under budget so we’ll have to come up with more money to finish them and then we’ll have to come up with even MORE money to maintain them once they are finished.
This stimulus package is NOT about individual people, it’s for the good of this entire country. If it doesn’t apply to you now, know it will be helping someone who actually needs these things.
I hope it helps some people who actually need help during this really really bad economic climate.
Oh, so once again being a responsible single adult I am screwed over once again for not spreading my legs and popping out 2352352 kids I can’t afford, buying a house that is irresponsible for me to buy and keeping a steady job despite my absolute distaste for it. Way to, once again, reward idiocy, America. Will octo-mom be given a nice chunk of change for her ability to super breed?