Individual Provisions

• A Making Work Pay Credit equal to the lesser of 6.2% of an eligible individual’s earned income or $400 ($800 for a married joint return) is established and is to be paid to the individual through revised payroll withholdings. The IRS will issue revised withholding guidelines to accomplish this adjustment. The credit is to be phased out for individuals with modified AGI above $75,000 ($150,000 for married joint filers). A one-time $250 payment will be made to qualified recipients of Social Security, Supplemental Security Income, railroad retirement, and veterans disability or pension benefits. Those recipients who are also eligible for the Making Work Pay Credit will have that credit reduced by the amount of payment received.
  
  
• A new, temporary deduction for state and local sales and excise taxes paid on the purchase of a new qualified motor vehicle (passenger vehicle, light truck or motorcycle with a gross vehicle rating of 8,500 lbs. or less or a motor home). The vehicle must be purchased after February 17, 2009, and before January 1, 2010. The deduction is available for taxpayers who itemize deductions and who use the standard deductions. The deduction is phased out for single taxpayers with AGI over $125,000 ($250,000 for married joint filers). The amount of tax is limited to that paid on cost not to exceed $49,500. It is specifically disallowed for taxpayers electing to deduct state and local sales and use tax in lieu of income taxes as an itemized deduction.
  
  
• AMT exemption amounts for 2009 increased to $46,700 for single taxpayers and $70,950 for married filing joint and surviving spouse returns ($35,475 for married filing separately).
  
  
• Up to $2,400 of unemployment compensation benefits received in 2009 will be excluded from gross income of the recipient.
  
  
• A subsidy of 65% of COBRA continuation health insurance premiums for up to nine months for workers involuntarily terminated.
  
  
• The Earned Income Credit was increased for low-income families with three or more children and the Refundable Child Credit calculation was adjusted to provide for a larger credit.
  
  
• The maximum Hope Credit was increased from $1,800 to $2,500 and was extended to apply to the first four years of college rather than the first two years. These changes are in effect for 2009 and 2010.
  
  
• The First-time Homebuyer Credit was increased to $8,000 and extended to apply to purchases before December 1, 2009 (was before July 1, 2009). The Recapture (repayment) provisions are waived for qualifying homes purchased after December 31, 2008, as long as the home remains the purchaser’s principal residence for at least 36 months from the date of purchase.
  

Energy Tax Provisions

• Several energy credits, including the Renewable Electricity Credit, were extended beyond 2009 and/or enhanced, and a new Qualified Advanced Energy Manufacturing Project Credit was established.
  
  
• The Nonbusiness Homeowners Energy Credit was extended to property placed in service through December 31, 2010, and the lifetime credit cap of $500 is replaced with a $1,500 cap for property placed in service after December 31, 2008, but before January 1, 2011.
  

Tax Incentives for Businesses

• Extended bonus depreciation and increased expensing for making investments in plants and equipment in 2009.
  
  
• Longer loss carryback for small businesses, a delay of the 3% withholding tax on payments to businesses that sell goods or services to governments, and a cut in the capital gains tax for investors in certain small businesses who hold stock for more than five years.
  
  
• Delaying the tax on businesses that have discharged indebtedness.
  
  
• Incentives to create new jobs with tax credits for hiring recently discharged unemployed veterans and youth that have been out of work and out of school for the six months prior to hire.
  

Energy Incentives

• $20 billion in tax incentives for renewable energy and energy efficiency over the next 10 years.
  
  
• Three-year extension of the production tax credit (PTC) for electricity derived from wind (through 2012) and for electricity derived from biomass, geothermal, hydropower, landfill gas, waste-to-energy, and marine facilities (through 2013).
  
  
• Grants of up to 30% of the cost of building a new renewable energy facility to address current renewable energy credit market concerns.
  
  
• Extension through 2010 and expansion of tax credits for home energy efficiency for purchases such as new furnaces, energy-efficient windows and doors, or insulation.
  
  
• A tax credit of up to $7,500 for families that purchase plug-in hybrid vehicles.
  
  
• Clean renewable energy bonds for state and local governments.
  
  
• A new manufacturing investment tax credit for investment in advanced energy facilities, such as facilities that manufacture components for the production of renewable energy, advanced battery technology, and other innovative next-generation green technologies.
  

Tax Incentives for State and Local Economic Development

• Changes to enhance the marketability of state and local government bonds, which will reduce the costs they incur in financing state and local infrastructure projects.
  
  
• A new bond-financing program for school construction, rehabilitation, and repair.