President Obama signed the American Recovery and Reinvestment Act of 2009 into law on February 17.  Here's is a brief list of provisions that may benefit individuals and families.  For more information visit

The House Committee on Ways and Means Web Site.

Making Work Pay Credit – The credit will provide a benefit of up to $400 ($800 per family).  It phases out for individuals with modified adjusted gross income over $75,000 ($150,000 for couples filing jointly).  The credit is calculated to be the equivalent of 6.2 percent of earned income and will be distributed through a change in employers’ withholding tables.  Self-employed individuals will receive the benefit through lower estimated tax payments.  The credit is retroactive to the start of 2009 and applies again in 2010.

Economic Recovery Payment – People receiving Social Security, SSI, Railroad Retirement, and Veterans Disability Compensation Benefits, as well as retired government workers, will receive a one-time payment of $250, offset by any Making Work Pay Credit received.  No details are available yet about how these payments will be distributed, but it is assumed that IRS will follow a plan similar to the one used to distribute the 2008 stimulus payments.

First-time Homebuyer Tax Credit – The current maximum $7,500 first-time homebuyer credit is raised to $8,000 and is extended through November 30, 2009.  Eligible taxpayers buying principal residences in 2009 do not have to repay the credit so long as they do not sell the home for three years.  (For homes purchased between April 9, 2008 and December 31, 2008, the credit has to be recaptured over 15 years.)  The credit phases out for taxpayers with AGI in excess of $75,000 ($150,000 for a joint return).  “First- time homebuyer” is defined as someone who has not owned a principal U.S. residence for the past three years. 

Higher Education Assistance – The economic stimulus bill temporarily expands the Hope scholarship credit under the new American opportunity tax credit, which is effective in 2009 and 2010.  The maximum credit per student is increased from $1,800 to $2,500 and extends the amount of time it can be used from two years to four years.  The Hope credit was nonrefundable, but the American opportunity tax credit is 40 percent refundable.  The phase out range for single filers is increased from $50,000-$60,000 to $80,000-$90,000 and for joint filers from $100,000-$120,000 to $160,000-$180,000.  Textbooks costs are now eligible for the credit.

In 2009 and 2010, the cost of computers and software (so long as the software is predominantly educational) for an eligible student can be paid for with money from section 529 qualified tuition plans.

New Car Deduction – Buyers of new cars and light trucks for the rest of 2009 can deduct the portion of state and local sales and excise taxes attributable to the first $49,500 of the vehicle’s purchase price.  It is an above-the-line deduction and allowed against the alternative minimum tax.  It will phase out for taxpayers with marginal adjusted gross income in excess of $125,000 for single filers and $250,000 for joint files.  It is effective on the date of enactment.

Child Tax Credit – The law extends for 2009 and 2010 the lower, $3,000 income threshold so that more of the credit is refundable to low-income taxpayers. 

Earned Income Tax Credit – Working families with three or more children may be eligible for an increase.  The credit is increased to 45 percent of the family’s first $12,570 of earned income and increases the beginning point of the phase out range for all married couples by $1,880.  The increase is for 2009 and 2010.

AMT Patch – The bill increases the AMT exemptions for 2009 to $46,700 for individuals and $70,950 for joint filers.

Unemployment Compensation – In 2009, $2,400 of unemployment benefits are excludable from taxation.

Qualified Transportation Fringe Benefit – The exclusion amount for a transportation fringe benefit increased from $120 to $230 per month (the same as the qualified parking amount).  The higher limit is effective starting in March 2009 and through 2010, with an annual inflation adjustment.