Economic Recovery Tax Relief

10 Year Cost

$287 billion

 Tax Relief for Individuals

Make Work Pay Credit -- $400 for singles, $800 for couples for 2009 and 2010.  Phase-out at begins at $75,000 and $150,000

EITC - temporary increase for 2009 and 2010

Child Tax Credit -- Reduce earnings threshold for refundable portion to $3,000 for 2009 and 2010

American Opportunity Tax Credit -- amends HOPE scholarship credit for 2009 and 2010 so that it is available for 4 years at a rate of 100% of first $2,000 in expenses and 25% of next $2,000, with income phase outs at $80,000/$160,000.  Includes some refundability provisions.  Make textbooks a qualifying expense.  Allow against AMT.  Make 40% of AOTC refundable ($3.6 billion).

First Time Homebuyers Credit -- $8,000, eliminates repayment requirement unless home sold in first three years.

Exempt Unemployment Benefits from Income Tax -- Up to $2,400 for 2009 exempt.

Tax Relief for Individuals

AMT Relief for 2009 -- Increases individual AMT exemption to $46,700 ($70,950 joint) and allow personal credits against AMT.

Sales Tax Deduction for Automobile Purchase -- Up to $49,500 in value of purchase, phase-out at $125,000 ($250,000 joint) AGI.

Tax Rebates for Seniors and Disabled -- $250 for SSA, SSI, railroad retirees and veterans disability recipients in 2009.  $250 refundable credit for state and federal pensioners not eligible for social security ($218 million).  NOT INCLUDED IN TOTAL ABOVE - TECHNICALLY THIS IS A SPENDING PROVISION.

Tax Incentives for Business

Accelerated Depreciation for 2009 -- continues for tax year 2009 the provision enacted as part of last year's stimulus bill - it actually has a $6 billion ten year costs as receipts increase on the back end.

Net Operating Loss -- 5-year carryback for 2008 NOL for businesses with gross receipts under $15 million.  Treatment of certain ownership changes of manufacturing firms for purposes of limiting NOL and certain built in losses ($2.5 billion)

Deferral of Certain Income from Indebtedness -- ($5 billion over ten years)

Renewable Energy Incentives

Renewable Electricity Credit -- extends for 3 years the placed-in-service date for each section 45 facility, excluding coal and solar

Extension and Modification of Credit for Nonbusiness Energy Property -- extension and 30% ($1,500 per residence cap) increase for expenditures between 12/31/08 and 1/1/11.

Manufacturing Incentives -- credit for investment in advanced energy property ($2.3 billion of credits to allocate).

Election of Investment Credit in Lieu of Production Credits --

Increased Limit on Qualified Energy Conservation Bonds ($1.6B allocation) and Qualified Energy Conservation Bonds ($2.4B allocation)

Alternative Motor Vehicle Credit -- and plug-in modification to existing credit.

Local Government Assistance

Delays for one year the 3% withholding on government contracts

Taxable Bond Option for government (Build America Bonds) -- 35% credit to bondholders for 2009 and 2010; 35% refundable credit to issuers for bonds issued in 2009 and 2010 (for obligations issued after date of enactment).  Allows the State or local government to elect to receive a direct payment from the Federal government equal to the subsidy that would have otherwise been delivered through the Federal tax credit for bonds.

Recovery Zone Bonds -- $15 billion private activity bond allocation (CA share would be about 12%); $10 billion allocation for refundable issuer credit bonds, credit rate of 45%

Qualified School Construction Bonds - ($11 billion in 2009 and 2010)

Modification to Rules for Financial Institutions -- changes interest expense rules related to tax exempt income - 12/31/08 through 1/1/11

Low Income Housing Tax Credit -- creates grant program to states for low income housing in lieu of low-income housing credit allocations for 2009