Well, Congress finally got it’s act together and passed the “economic stimulus” bill that President Obama wanted. Now all we have to do is wait and see if it stimulates the economy. Some provisions of the bill that might interest (or amuse) you are outlined below.

Regarding the Alternative Minimum Tax (AMT); the exemptions for 2009 were raised to $70,950 for married filing jointly and $46,700 for singles. In 2008 the exemptions were $69,950 and $46,200, respectively. This means those of you who are subject to the AMT will pay a little less of it with your 2009 taxes than you did for 2008.

The deduction for new equipment purchases under IRS Code Section 179 has been reestablished at 2008 levels of $250,000 and the 50% bonus depreciation have been extended through the end of 2009, both retroactive to January 1, 2009.

The first-time homebuyer credit has been increased to $8,000 and the requirement to repay it has been dropped. However, you have to live in the new home at least three years or you will have to recapture the credit in full. This is for qualifying purchases after December 31, 2008 and expires November 30, 2009. This credit phases out at Adjusted Gross Income (AGI) in excess of $150,000 on a joint return.

Sales tax on new autos will now be deductible “above the line”, limited to the first $49,000 of cost for vehicles purchased on or after the enactment of the new law. It expires December 31, 2009. This deduction is phased out at AGI $250,000 on joint returns.

The Child Tax Credit has been increase to $3,000.

The Hope Credit has been expanded to include all four years of college and the maximum amount of the credit was increased to $2,500 per year. This credit is phased out at AGI $160,000 for joint filers. It has also been renamed the American Opportunity Tax Credit.

A new credit is the Making Work Pay credit. This is a tax credit of 6.2% of earned income up to a maximum of $400 (for the credit) or $800 on a joint return. This is phased out at AGI $150,000.

The first $2,400 of unemployment compensation will not be subject to taxes in 2009.

For 2009 and 2010 beneficiaries of qualified tuition programs, like 529 Plans, can receive tax exempt distributions for required purchases of computers and computer technology, including internet access fees.

The new law decreases estimated tax requirements for individuals whose income is derived primarily from a small business. The new law allows computation of your 2009 Federal Estimated Taxes to be based on 90% of your 2008 liability instead of the 110% safe harbor provision in past years. To qualify, your AGI must be less than $500,000 and you must certify that more than 50% of the income on your prior year tax return comes from a qualifying small business.

The exclusion of gain on the sale of qualified business stock has been increased from 50% to 75% for sales of small business stock occuring after the date of enactment and before January 1, 2011.

Those are just some of the major highlights of the new law. President Obama is expected to sign this law today, February 17th. As we learn of more changes that will affect our clients we will post them here.

As you can tell from the various paragraphs above. Many, if not all, of the changes come with “phase-outs” at certain levels of income. It appears that our new President is keeping to his word of taxing those making more money more heavily than those of lower income levels.