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.
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.