What's in the tax cut extensions

WASHINGTON, D.C.
December 16, 2010 9:29pm

The House of Representatives shortly before midnight Thursday approved a bill that extends a package of tax cuts beyond their scheduled Jan. 1, 2011 cutoff and extends unemployment benefits which had been set to expire in two weeks.

The tax cuts add up to $801 billion. Jobless benefits payments will cost taxpayer $57 billion.

The legislation, previously approved in the Senate, now moves to the President Obama’s desk where it will be signed into law.

“After months of partisan bickering, I am pleased that Congress has extended these important tax cuts. A failure to act would have left countless Valley families and businesses out in the cold,” says Rep. Jim Costa, D-Fresno.

Mr. Costa says he hopes approval of the bill signals less partisan bickering and more compromise among members of Congress.

“We can’t move our economy forward unless members of both parties leave the campaign politics behind,” says Mr. Costa.

Here’s what in the package:

• A 2 percent employee payroll tax cut

The legislation includes an employee-side payroll tax cut for over 155 million workers – providing tax relief of about $112 billion next year.

• Extension of unemployment benefits

The legislation extends emergency unemployment benefits at their current level for 13 months, preventing an estimated 7 million workers from losing their benefits over the next year as they search for jobs.

• Child tax credit

The $3,000 refundability threshold established in the Recovery Act for the Child Tax Credit will be extended, ensuring an ongoing tax cut to 10.5 million lower-income families with 18 million children.

• Earned Income Tax Credit

The legislation continues a Recovery Act expansion of the Earned Income Tax Credit worth, on average, $600 for families with 3 or more children, and reduces the “marriage penalty” faced by working married families. Together, these enhancements to the EITC will help 6.5 million working families with 15 million children.

• American Opportunity Tax Credit

The new American Opportunity Tax Credit – a partially refundable tax credit worth up to $2,500 per student per year that helps more than 8 million students and their families afford the cost of college – would be continued under the agreement.

• 100 Percent Expensing

The agreement includes the President’s proposal to temporarily allow businesses to expense 100 percent of certain investments in 2011, potentially generating more than $50 billion in additional investment in 2011, which will fuel job creation.

• 1603 Renewable Energy Grants

The agreement extends the 1603 program, which provides payments in lieu of renewable energy tax credits and is helping to support tens of thousands of jobs in the wind and solar industries.

“We had a responsibility to protect middle class families from a tax increase that would have hit their paychecks and harmed the recovery,” says Treasury Secretary Tim Geithner. “This legislation is good for growth, good for jobs, good for working and middle class families, and good for businesses looking to invest and expand their workforce.”