The Stimulus Law – How it May Aid Local 464A Members

Some components of the Stimulus Bill, signed into law on February 17, 2009 by President Obama, may provide financial benefits to members of UFCW Local 464A. The new law is officially called The American Recovery and Reinvestment Tax Act. The financial benefits include the following:

1. Payroll Tax Cut – Up to $400 for individuals and $800 for joint filers. The effect will be a reduction in federal payroll taxes withheld from earnings. This will mean an additional $12 to $20 in weekly paychecks. Only individuals with annual adjusted gross income of $75,000 or less and joint filers with adjusted gross income of $150,000 or less are eligible.

2. Unemployment Compensation – For those who are out of work and receiving unemployment compensation the first $2,400 received will no longer be subject to federal tax. In addition, those whose unemployment payments would have ended by March 2009 will receive an extension of payments through December 2009. The average weekly benefit has also been raised by $25 to $325.

3. Health Insurance for the Unemployed (COBRA) – The cost of maintaining health insurance coverage under COBRA for laid off workers will be temporarily subsidized. Up to 65% of the premium costs will be subsidized for a period of nine months. This applies to workers who have been involuntarily laid off between September 1, 2008 and December 31, 2009. The subsidy is not retroactive, but will apply only to periods of coverage beginning on or after March 1, 2009. Those laid off workers who did not elect to participate in COBRA will be given an opportunity to participate now and will receive notices alerting them to this option.

4. Buying a New Car – State sales taxes applicable when purchasing a new car, truck, motorcycle, or recreational vehicle, may now be deducted from 2009 Federal income taxes. This applies to single vehicles valued up to $49,500 or  combined new vehicle purchases with a total value up to $49,500. The benefit phases out for individuals and joint filers earning adjusted gross incomes of $125,000 and $250,000 respectively.

5. Higher Education Tax Credit – Increased from $1,800 to $2,500 per year maximum and applicable to the first two years of college. Renamed the American Opportunity education tax credit (formerly called the Hope Credit).

6. Alternative Minimum Tax Burden – Exemption raised to $46,700 for individuals and $70,950 for joint filers. This effectively reduces the number of taxpayers subject to this tax from 30 million to just over 4.5 million.

7. Social Security - A one-time "economic recovery payment" of $250 will be made to individuals who are currently receiving social security benefits. These payments are anticipated to be sent within 120 days.