What Americans Are Getting:
Making Work Pay Tax Credit. The Making Work Pay tax credit provides a refundable tax credit of up to $400 for working individuals and $800 for working households, increasing most familiesâ€™ take-home pay by over $65/month. The Making Work Pay Credit helps 95% of working families â€“ over 120 million households in all. According to ADP, the nationâ€™s largest payroll service provider, more than 80% of workers paid though ADP received the Making Work Pay tax credit in paychecks dated March 1 or later, and virtually all of their clients began using the new withholding tables by March 6th. During the recovery period, Making Work Pay is expected to put more than $100 billion into the pockets of hard-working Americans.
Expansion Of The First-Time Homebuyer Tax Credit. The expansion of the First-Time Homebuyer tax credit allows qualifying taxpayers who buy a home this year before December 1, 2009, to claim a credit of up to $8,000 on either their 2008 or 2009 tax returns. Unlike the prior first-time homebuyer credit, individuals do not need to pay this credit back. This credit will contribute to stabilizing the housing market and is estimated that it will help 1.4 million Americans purchase their first home by providing over $6.5 billion in credits. Over $3 billion of credits have already been paid out to first-time homebuyers.
Increased Earned Income Tax Credit. The Recovery Act includes two improvements to the EITC. It increases the credit for families with 3 or more children to 45% by more than $500, helping to reward work and reduce poverty. And it reduces EITC-related marriage penalties by as much as $400. Overall, 6.3 million low-income families with 12.7 million children will benefit from these two changes.
American Opportunity Tax Credit. The American Opportunity Tax Credit provides financial assistance of up to $2,500 to help offset the cost of tuition and other expenses for individuals seeking a college education. This new credit is available for up to four years of college and is the first college tax benefit to be partially refundable so that it will benefit moderate-income households as well. It is expected to save 4.9 million families save $9 billion.
Child Tax Credit Expansion. Thanks to the Recovery Act, the Child Tax Credit will now increase tax funds for more than 11 million low-income earners by increasing the refundability of the credit. Before the Act, working families with less than $12,550 were set to be excluded from the credit. The Act reduced this eligibility floor to $3,000, increasing tax refunds for million of low-income working families with children. This increase in eligibility will put almost $18 billion into the pockets of families most likely to spend the money and stimulate the economy.