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Keeping Tabs on the Economic Stimulus Plan

Congress was able to put together a compromised plan of the economic stimulus plan yesterday. The final price tag is $789.5 billion.

Trying to follow the stimulus plan is like following a moving target these days… but here’s what we know today!

Home Buyer Tax Credit

Many of you were waiting with high hopes for the $15,000 Home Buyer Tax Credit [1] to be included. It appears that the proposed $15,000 tax credit is gone.

In its place is an $8,000 First Time Home Buyer Tax Credit [2] that doesn’t need to be paid back, unlike the $7,500 First Time Home Buyer Tax Credit [3] from 2008 which was really a loan. It would apply to homes purchased January 1 through November 30. You must keep the home for three years.

Tax Credit

It looks like we’ll each get a $400 ($800 for married) tax credit in 2009 and 2010 from the Make Working Pay Tax Credit [4]. The money will flow to our households through less withholding in paychecks (about $13 per week), starting this summer.

The tax credits begin to phase out at $75,000 ($150,000 for married). If you don’t make enough to pay income tax, you can file a return next year to get your money.

Cash Payments

People on Social Security, SSI, and veterans (on disability and pensions) will get a one time $250 payment.

More Tax Breaks and Benefits

There are many more programs included in the plan, including spending on energy, infrastructure, security, and science. Here are some of the personal finance related items cited by The Associated Press via Mlive [5]:

  • Unemployment Benefits: Extended through Dec. 31 and increase by $25 per week.
  • Food stamps: Increase by 14%.
  • Health Care: Offer a 60% subsidy for unemployed people using COBRA health insurance.
  • Education: Increase maximum Pell Grant by $500 to $5,350 and provide a $2,500 expanded tax credit for college tuition.
  • Alternative Minimum Tax: Save 24 million people from paying AMT [6] in 2009.
  • Bonus Depreciation: Extend the increased depreciation schedules for businesses for 2009.
  • New Cars: Allow you to deduct sales tax on new cars.

Both the House and Senate need to vote, and the President needs to sign the bill to become effective.