|First time homebuyer||$8,000|
|New car buyer||$3,589|
Additional MilitaryBenefits are even more.
Posted on USAA's website:
The Stimulus Plan: What's in it for You?Posted: 02/17/2009
Months in the making, the massive federal stimulus program is now a reality. Read on to find out if there's anything in the new law that you can take advantage of.
Wage-earners and the Self-employedA payroll tax credit will put an extra $400 in many Americans' pockets in 2009 and 2010 ($800 for married couples). Employees should promptly realize the benefit through reduced withholding from their paychecks. If you're self-employed, talk to your tax professional about reducing your quarterly estimated tax payments. Like many features of the stimulus plan, this break isn't for everyoneâ€”the credit starts to phase out when your income reaches $75,000, or $150,000 for married couples filing a joint return.
First-time HomebuyersTo bolster the real estate market, the stimulus package offers a tax credit equal to 10% of the purchase price of a first home. Tax credits are more valuable than deductions because they offer a dollar-for-dollar reduction of your tax bill. This one is capped at $8,000 and applies to homes purchased between Jan. 1 and Dec. 1, 2009.
Your right to claim this credit starts to phase out once your income exceeds $75,000 for singles and $150,000 for married couples. Unlike a similar credit passed last year, this one doesn't have to be repaidâ€”unless you sell the home within three years. (Read more about the home-buying tax credit.)
New Car PurchasersIf you buy a new car, light truck, sport utility, recreational vehicle or motorcycle after Feb. 17 and before Dec. 31, 2009, you may be able to deduct the state and local taxes you paid with your purchase. Used cars don't count. (Read more about the new car tax deduction.)
You don't even have to itemize your deductions to get this benefit, but there are two important limitations:
- You can only deduct taxes paid on the first $49,500 of the vehicle's price (editor's note, that's $3589 at 7.25% state tax.)
- The tax break starts shrinking once your income hits $125,000 for singles and $250,000 for married couples.
The UnemployedThe legislation provides two key benefits for those who've lost their jobs:
- A tax break on benefits. Federal unemployment benefits are usually taxable, but the first $2,400 (Ed note: $600 @ 25%) will be tax-free in 2009.
- Health insurance subsidies. When you lose your job, you generally have the right to keep your health insurance for 18 monthsâ€”but usually at a much higher out-of-pocket cost. To ease that pain, the stimulus plan creates a federal subsidy to cover 65% of the cost for the first nine months (Ed note: roughly $3600). To be eligible, you must have been forced from your job between Sept. 1, 2008 and Dec. 31, 2009. Also, your income can't be greater than $125,000 for individuals or $250,000 for married couples.
StudentsThe plan has three features focused on making higher education more affordable.
- A bigger and better HOPE credit. This tuition credit will rise to $2,500 in 2009 and 2010, will be available for four years instead of two (Ed note: at least $5000 benefit), and can now be applied to the cost of books. Eligibility is more liberal too, with the credit phasing out when income reaches $80,000 for singles and $160,000 for couples.
- Larger Pell Grants. These federal education grants for lower-income students will max out at $5,350 in 2009 and $5,550 in 2010â€”a $500 increase from the current schedule.
- A new use for money in 529 plans. These attractive college savings plans, which allow tax-free withdrawals for qualified expenses, are now even more flexible since they may be used to buy computers, software and Internet service.
Energy SaversIn 2009 and 2010, homeowners can take advantage of a 30% tax creditâ€”up to a maximum $1,500 (Ed note: $575 @ 25%) â€”for energy-saving improvements like:
- Energy-saving water heaters, air conditioners and heat pumps
- Biomass stoves
- Increased insulation
- Energy-efficient doors, windows and skylights