Taxpayers will see a variety of benefits impacting several different tax years under new legislation signed into law on Dec. 17, 2010. These include:
- A Two Percent Employee Payroll Tax Cut — The legislation includes an employee-side payroll tax cut for over 155 million workers, providing tax relief of about $112 billion in 2011 paychecks.
- Extension of Unemployment Benefits — The legislation extends emergency unemployment benefits at their current level for 13 months, preventing an estimated 7 million workers from losing their benefits over the next year 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, ensuring an ongoing tax cut to 10.5 million lower-income families with 18 million children.
- The Earned Income Tax Credit — The legislation continues a Recovery Act expansion of the Earned Income Tax Credit worth, on average, $600 for families with 3 or more children, and reduces the “marriage penalty” faced by working married families. Together, these enhancements to the EITC will help 6.5 million working families with 15 million children.
- The American Opportunity Tax Credit — The new American Opportunity Tax Credit — a partially refundable tax credit worth up to $2,500 per student per year that helps more than 8 million students and their families afford the cost of college — is continued.
- 100 Percent Expensing — The legislation temporarily allow businesses to expense 100 percent of certain 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 provides payments in lieu of renewable energy tax credits and is helping to support tens of thousands of jobs in the wind and solar industries.
For More Information
High-level descriptions of the provisions are available through the U.S. Senate Committee on Finance.
A technical explanation of the revenue provisions is available from the Joint Committee on Taxation.
- IR-2011-1, IRS Kicks Off 2011 Tax Season with Deadline Extended to April 18; Taxpayers Impacted by Recent Tax Breaks Can File Starting in Mid- to Late February