Texas County residents stand to benefit from several provisions in an economic stimulus bill signed into law Tuesday by President Obama.
The measure, passed last week by Congress to jump-start the economy, will aid Texas County residents.
So far, the slowdown hasn’t affected the overall economy that much, according to economic data. Sales tax revenue – as reflected in the last monthly sales tax checks to Houston government – was up more than 4 percent. Houston also has the benefit of new jobs announcements at two sites, which are estimated to generate about 100 jobs.
Here’s a rundown:
HOUSING/CARS: Buyers could get a modest break
If you’re in the market for a new car or your first house, the compromise stimulus bill offers modest tax breaks for both kinds of purchases.
First-time home buyers would receive an $8,000 tax credit, and they wouldn’t have to repay the government later as is required for the current $7,500 credit. An earlier Senate proposal would have provided all home buyers with a $15,000 credit.
The bill also would allow new car buyers to deduct the purchase’s sales tax from taxable income.
The average new car purchase price the first 11 months of last year was $28,280, and the average used car trade-in value was $15,203, according to data from the National Automobile Dealers Association. Paul Taylor, NADA chief economist, says states typically tax the difference – $13,077 in this case.
A 4.225 percent rate, as in Missouri, would be $553, Taylor says, meaning the deduction would reduce taxable income that much.
TAXES: A $400 to $800 credit for many taxpayers
A key element of the stimulus bill would provide most Americans with a tax credit of $400, or $800 for married couples. The tax credit would phase out for single taxpayers with adjusted gross incomes of $75,000 to $90,000 and married couples with AGI of $150,000 to $190,000.
The tax credit would increase the average taxpayer’s paycheck by about $8 a week, prompting some to question whether it will do much to stimulate consumer spending. But for a single worker, the credit is the equivalent of a $500 salary increase, after taxes.
Retirees who receive Social Security benefits and individuals on disability would receive a $250 tax credit, says Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants. Because these individuals typically don’t have withholding, they’ll likely receive a check, he says.
Other tax provisions in the stimulus package:
-An expanded earned income tax credit and child tax credit for low-income families.
-A higher education tax credit. Parents of college students would be eligible to claim a tax credit of up to $2,500. The credit is more generous than the existing Hope Scholarship Tax Credit, which maxes out at $1,800 and is available only for the first two years of college. The tax credit, which would be available in 2009 and 2010, phases out for single taxpayers with AGI of $80,000 to $90,000 and married taxpayers with AGI of $160,000 to $180,000.
-A stopgap measure designed to prevent the alternative minimum tax from hitting more than 24 million households in 2009. The AMT was designed to prevent extremely wealthy taxpayers from using loopholes and deductions to avoid taxes. But because it was never indexed to inflation, it has expanded to encompass more upper-middle and some middle-class taxpayers. About 4 million owed the AMT last year.
ENERGY: Weatherizing homes will save money
The agreed-upon stimulus plan provides about $50 billion aimed at ushering in a clean-energy future and includes money or tax credits for Texas County residents to weatherize their homes and buy hybrid cars.
It also commits dollars to upgrading the electricity grid and underwriting renewable energy projects.
The bill sets aside $5 billion to weatherize more than one million modest-income homes, saving families an average $350 a year. It devotes $6.3 billion to improve federally backed and public housing projects with new insulation, windows and furnaces. Higher-income households can make similar improvements and get expanded tax credits.
For every dollar spent, such programs produce about $3 in electricity savings, it is estimated.
Spending $11 billion to upgrade the nationwide transmission grid to get renewable energy from rural areas to cities and digitize the electric grid to prevent outages is more controversial.
Funds for the expansion of brandband communications – high speed Internet – are also included to serve underserved areas such as Texas County.
SCHOOLS, CITIES, LIBRARIES
Texas County schools, cities and the county library system also could benefit from provisions that will pump money into the economy for construction and remodeling.