Lower Paycheck Withholdings to Benefit Millions of Americans
President Obama in February signed the Making Work Pay tax credit, a law aimed at helping working Americans. This week, many are beginning to reap the benefits.
The IRS set April 1 as the deadline for employers to institute lower withholdings for their employees. The Making Work Pay Act is essentially a tax cut, which the White House describes as one of the fastest and broadest in American history.
Here’s how it works:
- For 2009 and 2010, the Making Work Pay tax credit provides a refundable tax credit of 6.2 percent of earned income up to $400 for working individuals and $800 for married taxpayers.
- Families should see at least a $65 dollar per month increase in their take home pay.
- The credit will phase out for taxpayers with adjusted gross income in excess of $150,000 for married couples filing jointly and $75,000 for other workers, and thus is fully phased out for taxpayers with modified adjusted gross income in excess of $190,000 for married workers and $95,000 for other workers.
Over 110 million working American families, or about 95 percent of all Americans, will receive about $60 billion over this span. Republicans announced today in their alternative budget that they would roll these tax credits in 2010.
About 3.4 million Georgia working families will receive $1.7 billion budget. Click here to see a detailed (but complex) package from the IRS further describing the tax credits.