President Obama signed an $858 billion tax bill into law Friday, Dec. 17. The Senate passed the tax package by a vote of 81-19, Wednesday, after rejecting three amendments. The House passed the measure 277 to 148, with 112 Democrats and 36 Republicans voting "no," on Thursday. By passing the bill, the president prevents taxes from rising as early as New Year's Day for almost every American household.
The two-year legislation is an extension of the income-tax cuts implemented 10 years ago under President George W. Bush. The cuts would have expired on New Year's Eve.
According to a Washington Post article, the package includes a one-year reduction in the payroll tax rate for individuals, to 4.2 percent from 6.2 percent; an expensing break that would allow businesses to write off new equipment purchases in the 2011 tax year; and continued funding for an emergency program that provides up to 99 weeks of benefits for jobless workers. Additional major new incentives for business and consumer spending in 2011 would include a 2-percentage-point reduction in the Social Security payroll tax that would let workers keep as much as $2,136.
The package is expected to give middle-class families a boost, cut taxes for small businesses, create 2 million jobs, and provide a safety net for those looking for a job. It also includes $55 billion in benefits for Washington's most influential industry groups. The energy and agricultural industries, for example, will continue to receive a generous ethanol tax credit at a cost to taxpayers of about $6 billion in 2011, according to The Post article.
Read a CNNMoney.com story on the tax package to understand how it affects you.
Tell me your thoughts: Will the legislation get you any bang for your buck? Will it be good for businesses looking to invest and expand their workforce? Or do you think the temporary extension will eventually become permanent, setting lower tax rates far into the future?
The author is senior editor of Glass Magazine. Write her at email@example.com.