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What the New Economic Stimulus Plan Means to You

For information about Payroll Tax Credits, known as the "Making Work Pay" credit, click here.
 
On Friday, February 13, 2009, Congress Bookmark and Share
passed the American Recovery and Reinvestment Act, which President Barack Obama signed into law on February 17, 2009. This new $787 billion economic stimulus plan will put more money in your pocket, but it has many other implications as well. Some of the most important details are summarized below.

The most immediate and visible benefits will be weekly tax credits in the paychecks of most Americans, credits for first time home buyers, and the ability to write off sales taxes for new car purchases made before the end of 2009. Unemployment benefits, health insurance, infrastructure (highways, bridges, etc), and education will also be affected.
 

For a quick summary, watch President Obama explain the new bill and how it will affect the country.

Where's the money going?
Source: recovery.gov


* Tax Relief - includes $15 B for Infrastructure and Science, $61 B for Protecting the Vulnerable, $25 B for Education and Training and $22 B for Energy, so total funds are $126 B for Infrastructure and Science, $142 B for Protecting the Vulnerable, $78 B for Education and Training, and $65 B for Energy.

State and Local Fiscal Relief - Prevents state and local cuts to health and education programs and state and local tax increases.

Your Paycheck
For more details, go to the Payroll Tax Credits page

In 2009, Americans making up to $75,000 will see extra money in their paychecks from a $400 tax credit (couples making up to $150,000 may receive up to $800). This credit will begin in the middle of the year and will be divided evenly among the paychecks for the remainder of the year. A similar credit is expected in 2010.

Homes, Cars, and Education
For more details, go to:
            - First-Time Home Buyer Tax Credit
            - New Car Sales and Excise Tax Deduction

  • $8,000 tax credit for first-time homebuyers who purchase before December 1. As of February 16, 2009, it doesn't appear that this credit would require repayment. This is an improvement over 2008's First Time Homebuyer Credit of $7,500, which was in interest free loan that required payback over 15 years.
  • Write off sales taxes for new cars purchased in 2009
  • The Hope Scholarship Credit, which was previously availably only for freshman and sophomore years, will now be offered for the first four years of college in 2009 and 2010. The credit is up to $2,500 for tuition and related expenses.

Schools

$54 billion will go to state budgets to restore teaching jobs and improve schools, among other initiatives.

  • $44.5 billion to be used for preserving teachers' jobs, school modernization, or repairs
  • $25.2 billion for special education and the No Child Left Behind Act

Environment

Response has been positive from most environmental groups. Billions of dollars are reserved for protecting fresh water, improving national parks and wildlife refuges, and boosting renewable energy. The plan includes:

  • $7.2 billion to the EPA
  • $3.4 billion for fossil energy development
  • $6 billion in loan guarantees for renewable energy projects

Jobs and Unemployment

The plan is designed to save or create more than 3.5 million jobs in the next two years. Those receiving unemployment benefits won't pay taxes on the first $2,400 received.

$40 billion will go toward increasing unemployment benefits by $25 per week through 2009.

Veterans, Social Security, and Needy Families

The Earned Income Tax Credit and Child Tax Credit will be expanded, and a $3 billion fund will be created to provide assistance to families who need temporary financial assistance.

Food stamp benefits will be increased by 14 percent.

$250 one-time payments will be given to veterans receiving disability and pension payments, and those receiving Social Security or Supplemental Security Income.

Health Care

$87 billion will be provided to assist states with Medicaid administration.

For anyone who becomes unemployed between September 1, 2008, and December 31, 2009, the government will pay up to 65% of COBRA premiums for the first nine months of coverage (24.7 billion). You can learn more about COBRA coverage at the United States Department of Labor website.

Infrastructure

$90 billion will go toward improving the nation's infrastructure. It will be spent on improving roadways ($27.5 billion), updating the aviation system, and replacing and maintaining water systems ($6 billion).

  • $5 billion to repair and construction of public housing
  • $2.5 billion for housing of the elderly, disabled, and blind

Energy

The plan includes $11 billion for making the US energy grid more modern, reliable, and efficient, and $6 billion in loan guarantees for renewable energy initiatives. Nearly $7 billion in additional funds will go to research and development of renewable and fossil energy, and energy efficiency programs.

  • $5 billion to for weatherizing homes for money and energy savings
  • $6.4 billion to clean up nuclear weapon production sites
  • 2 billion in grants for advanced batteries for electric vehicles

Scientific Advancement

  • $3 billion to the National Science Foundation (NSF)
  • $1 billion to NASA

Broadband Access

$7.2 billion will be used to deploy broadband internet access to areas currently without broadband service, though the exact details are still being determined.

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This site is constantly being updated with new information about the American Recovery and Reinvestment Act. Please come back often to see the latest information.

Proportionate Effects by State

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