The amount of the credits are determined based on income. Those earning up to $75,000 will receive a total of $400 for the year, while those earning $75,000 to $100,000 will receive a smaller amount proportionate to their income.

The credit is refundable, which means that low-income families, who normally would not owe income tax, will also be eligible for the credit. For those whose paychecks are too low to have taxes withheld, the credit can be claimed when 2009 taxes are filed.

The payroll tax credit is paid out evenly over the course of the year, and should equal about $11.00 per week for those entitled to the full $400.00.

Those claimed as a dependent on someone else's tax return are not eligible for the credit.

Adults eligible for Social Security, Railroad Retirement, veteran's compensation or pension benefits are also ineligible.  A $250 "emergency payment" will be paid this year to ineligible individuals (except those claimed as a dependent) if the individual was eligible for the above benefits during the period of November 2008 to January 2009.

A similar credit is expected in 2010.

You can use the IRS withholding calculator to determine how the reduced withholding will affect you, and whether the reduced withholding will cause you to have too little income tax withheld. Withholding too little income tax could cause you to owe taxes next year.