Tax Changes in the American Recovery and Reinvestment Act

Tax Act

Tax Changes in the American Recovery and Reinvestment Act

A number of tax law changes were made in the recently passed and signed American Recovery and Reinvestment Act also know as the Federal Stimulus Bill. Those changes include Income Tax reductions, Unemployment taxes, Cobra Health Insurance subsidies, and number of other important changes.

Income Tax Reduction

Individuals and couples will get a $400 income tax reduction through their payroll per person for the 2009 and 2010 tax years. The reduction phases out for individuals that make more than $75,000 or couples earning over $150,000 a year.

Unemployment Tax

Those receiving unemployment due to job loss would normally need to pay tax on the income. But under the American Recovery and Reinvestment Act, all unemployment payments will be tax free.

Health Insurance Coverage

Under Cobra, laid off workers can continue to be covered under their prior employer’s health plan, but they have to pay the premiums themselves which are often quite a bit more than an self insured person would pay. Under the new law, the US Government will now pay 65% of all Cobra premiums for unemployed workers.

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4 Comments

  1. Posted February 21, 2009 at 1:14 am | Permalink

    I like the income tax reduction but would rather get a check at the beginning of the year rather than have small payroll additions throughout the year.

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  2. Posted February 22, 2009 at 4:25 am | Permalink

    I heard President Obama thinks the payroll deduction will happen as soon as April 1st. You’ll get $33 a person a month in tax reductions from your pay check.

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  3. montgomery mortgage
    Posted March 26, 2009 at 9:49 pm | Permalink

    Hi
    Individuals and couples will get a $400 income tax reduction ?

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  4. seo india
    Posted March 26, 2009 at 10:02 pm | Permalink

    Hi
    US Government will now pay 65% of all Cobra premiums?

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