Tax Relief to Working Americans

Health Insurance For Workers Between Jobs. To help people maintain health coverage following job loss, the Recovery Act provides a 65% subsidy for COBRA continuation premiums for up to 9 months. As a result, eligible individuals pay only 35% of their COBRA premiums. Based on average COBRA premiums, this amounts to a subsidy of about $325 per month for single coverage and $715 per month for family coverage. This subsidy is expected to provide approximately $24 billion in benefits to more than 5 million individuals and families that have recently lost jobs that provided them with health benefits.

Benefits For Retirees, other Social Security Beneficiaries and Disabled Veterans. The American Recovery Act provides a one-time payment of $250 to retirees, disabled veterans, and SSI recipients. Over 64 million retirees and other individuals will receive this one-time payment, totaling $16 billion.

Auto Sales and Excise Tax Deduction. The Recovery Act provides taxpayers with a new tax deduction for state and local sales and excise taxes paid on the purchase of a new car, light truck, recreational vehicles, or motorcycles through 2009. This deduction is estimated to save 7.8 million new vehicle purchasers $1.6 billion during the new recovery period.

Carryback Of Net Operating Losses For Small Businesses. Under the Recovery Act, small businesses can elect to carryback 2008 net operating losses (NOLs) for up to five years, as opposed to 2 years. This longer carryback period gives small businesses that experienced losses in 2008 the ability to get immediate refunds of income taxes they paid in earlier years and is estimated to give back $3.4 billion to small businesses this year.

Expanded Depreciation for Businesses. The economic recovery legislation extends a provision allowing small businesses to expense up to $250,000 in investments. In addition, the extension of the bonus depreciation under the Recovery Act generally allows businesses that purchase equipment placed in service during 2009 to accelerate their first year depreciation to up to 50% of purchase cost. This additional tax relief is estimated to help business save $34 billion during the recovery period.

(Source: White House)

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