Tax Relief for 160 Million Workers

President Obama is working to rebuild our economy the American way, based on balance, fairness, and the same set of rules for everyone from Wall Street to Main Street. That’s why the President passed a payroll tax cut worth $1,000 for the typical family earning $50,000 a year. That’s why he created the American Opportunity Tax Credit, providing families and students up to $10,000 to help them pay for college. That’s why he’s cut taxes for small business, helping them hire, invest in new equipment, and pay for health care coverage for their employees. That’s why he secured a bipartisan agreement to continue existing tax cuts for an additional two years, an agreement that outside economists said would create hundreds of thousands of new jobs and boost the economy when we are still recovering from the worst economic crisis since the Great Depression. And that’s why he’s called for a balanced approach that makes sure everyone pays their fair share by closing tax loopholes and subsidies for special interests and ending the tax breaks for millionaires and billionaires.

The bipartisan agreement delivered several key victories – victories that have given the average American family assurance that there will be more money to pay the bills each month:

An employee-side payroll tax cut of approximately 2 percent: The agreement included an employee-side payroll tax cut for 160 million Americans – providing tax relief of about $112 billion next year, or about $40 with every paycheck  for the typical family.

Extension of unemployment benefits: The agreement extended emergency unemployment benefits at their current level for 13 months, preventing an estimated 7 million workers from losing their benefits over 2011 as they search for jobs.

The Child Tax Credit: The $3,000 refundability threshold established in the Recovery Act for the Child Tax Credit will be extended under the agreement, ensuring an ongoing tax cut to 10.5 million lower-income families with 18 million children. 

The Earned Income Tax Credit: The agreement continued a Recovery Act expansion of the Earned Income Tax Credit worth, on average, $600 for families with 3 or more children, and reduced the “marriage penalty” faced by working married families. Together, these enhancements to the EITC have helped 6.5 million working parents with 15 million children.

The American Opportunity Tax Credit: The new American Opportunity Tax Credit – a partially refundable tax credit that helps more than 8 million students and their families afford the cost of college – has been continued under the agreement.

100 percent expensing: The agreement includes the President’s proposal to temporarily allow businesses to expense 100 percent of their investments in 2011, potentially generating more than $50 billion in additional investment in 2011, which will fuel job creation.

1603 renewable energy grants: The agreement extends the 1603 program, which is helping to support tens of thousands of jobs in the wind and solar industries.

These victories all come on top of the extension of lower income tax rates for middle-class Americans.