What Is the Status of the Tax Cuts Put in Place under President Obama?
The “American Recovery and Reinvestment Tax Act of 2009” contained eight provisions affecting the individual income tax: (1) the “Making Work Pay” tax credit; (2) an extension of the so-called “AMT patch” through 2009; (3) increased eligibility for the refundable child tax credit; (4) the creation of the partially refundable “American Opportunity” education tax credit; (5) an expansion and extension of the “homebuyer” tax credit; (6) an increase of the earned income tax credit; (7) temporary exclusion of unemployment benefits from taxation; and (8) the sales tax deduction for automobile purchases.
While the homebuyer credit extension cited above expired in November 2009, it was extended once again until April 2010, when it eventually expired. Obama has not indicated he would support bringing that credit back.
The “Making Work Pay” tax credit expired at the end of 2010. It was replaced with a 2% cut to the employee-side social security payroll tax (the rate was reduced from 6.2% to 4.2%), originally set to expire at the end of 2011 but now extended through 2012. Congress has patched the AMT through tax year 2011 and is expected to do so retroactively for 2012 sometime this year. The stimulus bill’s expansions to the EITC have also been extended through 2012, as well as the increased child tax credit eligibility and American Opportunity education tax credit. All of these provisions are scheduled to expire at the end of 2012 along with the 2001 and 2003 Bush tax cuts.