The $787 billion bill contained several tax breaks for families and small businesses. Chief among them was the “Making Work Pay” refundable tax credit that maxes out at $400 for working singles, $800 for working couples, for those earning less than $75,000, or $150,000 for joint filers.
Obama said the tax break fulfilled his campaign promise to provide relief to workers.
“I kept a promise I made when I campaigned for this office and cut taxes for 95 percent of working Americans,” he said. “For most Americans, this Making Work Pay tax credit began showing up in your paychecks last April. And it continues this year, for a total of $400 per individual and $800 per couple, per year.”
Absent congressional action, the tax credit ends this year.
The Recovery Act gave working families a temporary increase in the Earned Income Tax Credit. It also lowered the bar for qualifying for the child tax credit and provided an “American Opportunity” tax credit of up to $2,500 for tuition and other education-related expenses incurred in 2009 and 2010.
The legislation also created a “first time homebuyer” tax credit that Congress subsequently changed to include veteran home purchasers.
Last November, lawmakers extended the $8,000 first-time homebuyer tax credit for purchases ratified by April 30 that close before June 30. Lawmakers added a $6,500 tax credit to the bill for veteran buyers that couldn’t qualify for the first-time buyer credit.
Both tax breaks are set to expire this month. The White House did not comment on whether or not there would be an effort to extend them.
The National Association of Realtors recently told The Hill it would no seek an extension of the homebuyer tax credit.
For businesses, the Recovery Act extended bonus depreciation, a tax rule that allows companies to collect a larger tax refund by depreciating property faster than usual.
Obama credited these tax breaks with helping working families and businesses weather the tough economic downturn. He also said the health reform law will provide additional relief.
“It’s also important to note that the new health reform law includes the largest middle class tax cut for health care in history, and once it’s implemented; millions of Americans will finally be able to purchase quality, affordable care and the security and peace of mind that comes with it,” he said. “And one thing we have not done is raise income taxes on families making less than $250,000. That’s another promise we’ve kept.”