Highlights of the tax package passed by Congress

By The Associated Press

Highlights of the tax package passed by Congress late Thursday and sent to President Barack Obama. It would cost about $858 billion; most provisions, which were to expire Jan. 1, would be extended for two years, unless noted.

THE PACKAGE EXTENDS:

- Lower rates for taxpayers at every income level. The top rate, on taxable income above $379,150, would stay at 35 percent, instead of increasing to 39.6 percent. The bottom rate, on taxable income below $8,500 for individuals and $17,000 for married couples, would stay at 10 percent, instead of increasing to 15 percent. Cost: $186.8 billion.

- More generous itemized deductions for high-income households. Cost: $20.7 billion.

- A more generous $1,000 child tax credit. Cost: $71.7 billion.

- Marriage penalty relief, increasing the standard deduction for married couples. Cost: $18 billion.

- A more generous Earned Income Tax Credit for low-income families. Cost: $15.7 billion.

- A series of tax breaks for students and their families, including interest deduction for student loans and an exemption for employer-provided educational assistance. Cost: $3.3 billion.

- A deduction for tuition and related expenses for higher education, for 2010 and 2011. Cost: $1.2 billion.

- A tax credit of up to $2,500 for students' higher education expenses. Cost: $17.6 billion.

- The top capital gains tax rate of 15 percent. Cost: $25.9 billion.

- The top tax rate on dividends of 15 percent. Cost: $27.3 billion.

- Through 2011, enhanced jobless benefits for people who have been unemployed for long stretches. Cost: $56.5 billion.

- A series of incentives for selling, using and producing alternative fuels, including ethanol. Many of the provisions expired at the end of 2009. They would be extended through 2011. Cost: $11.3 billion.

- A $250 deduction for out-of-pocket classroom expenses by teachers, for 2010 and 2011. Cost: $390 million.

- A federal income tax deduction for state and local sales taxes, taken mostly by people who live in the nine states without state income taxes, for 2010 and 2011. Cost: $5.5 billion.

- The ability of older Americans to withdraw up to $100,000 a year from Individual Retirement Accounts, tax-free, to donate to certain public charities, for 2010 and 2011. Cost: $979 million.

- A business tax credit for research and experimentation expenses, for 2010 and 2011. Cost: $13.3 billion.

- Tax breaks for capital improvements to restaurants and other retail buildings, for 2010 and 2011. Cost: $3.6 billion.

- A tax break for active investors in foreign-based banking, securities and insurance firms, for 2010 and 2011. Cost: $9.2 billion.

- I ncreased depreciation and expensing for capital investments by businesses. Cost: $21.8 billion.

THE PACKAGE ALSO:

- Spares more than 20 million middle-income households from tax increases averaging $3,900 from the Alternative Minimum Tax in 2010 and 2011. Cost: $136.7 billion.

- Imposes a lower estate tax for the next two years, allowing couples to pass estates as large as $10 million to heirs tax-free. The balance would be taxed at 35 percent. Cost: $68.1 billion.

- Provides a one-year Social Security tax cut for all wage earners, from 6.2 percent to 4.2 percent. Cost: $112 billion.

---

Source: Joint Committee on Taxation.

(Copyright 2010 by The Associated Press. All Rights Reserved.)