The Obama tax deal is in full motion this week. The Senate moved the new tax deal forward with a procedural vote on Monday. They will vote on the final tax cut today.
The tax cut will keep the Bush tax cuts from expiring, which were set to expire at the end of the year. The 2011 tax deal would extend the 2001 tax cuts for two more years, until 2012.
Obama Tax Deal Cost
The cost of the new tax deal is $858 billion. It is more expensive than the 2009 economic stimulus package.
New Tax Deal
- Estate tax cut: Lower estate tax from 45% to 35%. Estate tax exemptions would rise from $3.5 million to $5 million ($10 million for married couples).
- Extend unemployment: The unemployed will get an extension of unemployment insurance through 2011.
- Payroll tax cut: The 2011 Payroll Tax Cut will cut payroll tax by 2%.
- Child tax credit: Extend the $1000 child tax credit.
- College tuition credit: Extend the college tuition tax credit for students.
- Earned income tax credit: Extend the earned income tax credit.
- Mortgage insurance premium: Extend the mortgage insurance deduction.
- AMT: An AMT patch to temporarily fix the alternative minimum tax.
- Business tax cuts: Subsidies and tax cuts for businesses for investments and research and development.
- Dividend tax rates: Extend lower dividend tax rates for qualified dividends.
- Build America Bond subsidies: These subsidies are NOT included.
$250,000 Limit Not Included
As it stands the tax compromise includes tax cuts for everyone, not just those with an income below $250,000, as the Democrats supported.
This differs from votes in our poll: Will the Obama Tax Cuts Pass? The majority of readers assumed that the tax cuts would be extended only for people making under $250,000.
How it will Impact Your Taxes
If you want to see what the Obama tax cut will look like for your taxes, you can use the 2011 Tax Calculator to see a projection.
Not Included in the Obama Tax Cuts
The following 2009 tax deductions and credits were allowed to expire and cannot be claimed on your 2010 taxes:
- $2400 Exclusion on Unemployment
- How to Take a Property Tax Deduction Without Itemizing
- New Car Tax Deduction
What’s Next on the Obama Tax Cuts?
- The Senate will vote on a final tax cut today.
- The House will work to change some of the current provisions in the tax deal and vote this week.
- Congress wants to have the the bill to Obama to sign at the end of the week.
Stay tuned for more on tax deal Obama for 2011!