A New 2011 Economic Stimulus Package With Obama-Bush Tax Cuts and Unemployment Benefit Extensions

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[Update – No New Taxes with Tax Extensions Approved] President Obama has now signed into law a bill that covers a temporary extension of all the bush-era tax cuts. The new bill also contains extensions to some of the 2008 stimulus tax breaks, and even has some new tax cuts. With this legislation he has essentially created a new 2011 Economic Stimulus package, estimated at around $858 billion. Here’s how various key components of the “2011 economic stimulus package” legislation will affect you:

No increase in federal income taxes as current rates stay the same. The table below provides the potential 2011 tax rates and brackets, which are slated to be the same as 2010 levels. Tax bracket ranges may move slightly when the official IRS tables are published, but with low inflation the changes should be minimal. A rise in tax rates would have cut the after-tax pay by $3,000 for the average tax payer, so this provision is worth a lot given current economic conditions. However, the tax rates extension is only for 2 years, and unless the economy really tanks, don’t look for these to be extended again.

Lower social security payroll taxes = More money in your paycheck. The employee payroll tax, which funds Social Security and Medicare, would also be cut by 2% during 2011 to help spur business hiring. Unfortunately this social security benefit will be of no help to seniors who will not receive another $250 supplementary social security payment (nixed by Congress, due to low inflation) in 2010. Seniors should benefit from the unchanged tax rates, but are probably the group getting the least benefits from all the deficit adding stimulus spending.

Extension of unemployment benefits for 13 months. This will allow the long term unemployed to keep their unemployment benefits longer. Over 2 million unemployed would have lost their benefits this month if the insurance was not extended. However the maximum is still 99 weeks and the growing number of ultra-long term employed is a worrying trend for everyone.

Small business owners get capital equipment tax breaks. Under the compromise deal,  business’ will get to take a full deduction for equipment purchases that currently must be deducted over time (accelerated depreciation original proposed in small business jobs bill). The proposal would accelerate $200 billion in tax savings for companies in the first year and benefit 1.5 million companies and several million individuals who run businesses.

Capital gains and dividend taxes unchanged providing a boost to equities –Long-term capital gains (on assets held at least a year) and qualified dividends will continue to be taxed at a maximum of 15%. This benefit will mean that investors can keep more of their gains and should see the stock market enjoy more gains in 2011.

Estate limit increase and lower taxes – Existing thresholds will be raised to $5 million for an individual or $10 million for a couple for both estate and gift-tax levies, with a top tax rate of 35%.  These new provisions are only for 2 years and will expire at the end of 2012, meaning a lot of revised estate planning for families. Taxpayers who have already used some of their lifetime exclusion under the old rules ($1 million) will be eligible for the higher exemption limit. The annual gift limits will  remain at $13,000, or $26,000 for a couple, a year for each beneficiary; this is in addition to the lifetime limits.

The extension of the tax cuts also reinstates many smaller, but still valuable, tax credit provisions that were also scheduled to expire at the end of 2010:

  • The American Opportunity Credit, which allows college students and their parents to save up to $2500 on their taxes.
  • Teachers Tax Credit for teachers who purchase classroom supplies using their own money. They can continue to write off eligible costs up to $250.
  • Child Tax Credit of $1000 per child under 17 years-old will continue to be available to parents or legal guardians on the child.
  • The already expanded  Earned Income Credit, which reduces the marriage penalty and creates a “third tier” of the EITC for families with three or more children, has been extended for another 2 years.

I will continue to update this post as the legislation passes through Congress and encourage you to subscribe (free) to get the latest news.

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36 Comments on "A New 2011 Economic Stimulus Package With Obama-Bush Tax Cuts and Unemployment Benefit Extensions"


2011 and 2012 Capital Gains Tax Rates – Short and Long Term | Saving to Inve$t
Sunday 10:37 pm

[…] tax rates for those in the 10% and 15% federal income tax brackets was a special provision in the bush-era tax cuts which were extended to […]

[…] But after 2012, tax rates are bound to increase as the US government will be unable to afford further extensions of lower tax brackets implemented in 2001.  Based on current and projected inflation rates, the […]

STELLA APOSTOLOS
Saturday 7:05 pm
We the 65 y.o. retired crowd are receiving the least benefit from Obama’s plans- or no benefits at all. We have put our hearts and souls into this country, working all our lives and contributing our share to make this land what it is today. I wonder what happened to all his promises to focus on the middle class and elderly in his administration? I heard this in almost every speech he made. That’s why I voted for him. My mistake.!!!!! The people he has injured are the retired middle class and elderly.///// Our retirement money is earning nothing. The elderly who have absolutely NOTHING but s/s are losing their houses and apartments because there’s been no raise now going on 3 years. Where are the promises he made? Instead, they argue like juveniles instead of the kind of people we should be able to look up to with pride… Read more »

[…] this a 2012 stimulus plan, which will fail like the ones he enacted in 2009 (Recovery act) and 2010 (bush tax cuts and unemployment extension). It is likely that whatever job creation package the […]

L. Kenne
Thursday 5:33 pm
So I get 400 dollars a week unemployment and I have to pay 675 dollars a month COBRA. I have a BA and a masters! I have 18 years experience in my field. Employers are now allowed to ask potential candidates oh yea you will do everything for less than half the salary and you will dump the garbarge cans and like it okay? Bosses are also getting more abusive because they know that people are too frightened to say anthing for fear of losing their jobs. I think the government should be held responsible for the abusive and demoralizing work situations that they are forcing people into. They wrecked our economy and they should be held accountable! At the very least they should be laidoff get 400 dollars a week unemployment (that is the max UI in NYC) and have to pay over 600 dollars for COBRA coverage. If… Read more »
Kindred1845
Tuesday 3:52 pm
I find a few things interesting here: 1) Everyone blames the president for this, and NOONE else – we have the senate, the house of representatives and the president – and based on some of the editorials and information I read, Obama wanted to remove the tax cuts for the upper one percent, and only keep the the cuts for middle and low income families – republicans wouldn’t go for it touting the fact that it was “unfair” to not treat all Americans equally and “punish” the wealthy. Any more than they were willing to even consider tax reform of any kind on the debt ceiling vote. I’m not an Obama lover, but nor am I a hater – I recognize that although he may be president, he has hoops to jump through just like everyone else and he has to make compromises all the time in order to get… Read more »

[…] initiatives are not new (he also wanted to spend more on infrastructure and tax reform) and as in earlier pushes he is likely to face strong congressional Republican opposition for whom any new government […]

robert cornett
Sunday 1:58 pm

hi my name is robert cornett, checking to see if i can get some help…i’m on social security and i stay in a house me and my 13 year old son, i been staying here for about 12 years..in 2006 i was on a motor cycle and got hit by a drunk driver and my life never been the same since….i lost just about every thing i had because i don’t make the same money….what i would like to no if there any way i can be exempt from paying taxes, the money i get from social security barely pay house note every month and food to eat……….paying the taxes at the end of the year is my big problem…not sure if i could get food stamps are not but it would help if i could……my main question is those house taxes…..

kelly
Tuesday 11:09 am

They say no increase in cola so there will be a 250.00 one time payment for ssi in 2011 , if that is correct than when . I’ve been all over the web to find answers but to no avail. Does anybody know ? I’ll keep checking ,but this time I’m taking down ####’s

Jonathan
Saturday 2:04 pm

The US population is just under 312million people, figuring 75% are tax payers. That leave 234million people roughly. If they gave these people $200,000 each they will have spent just under $47billion dollars. Compared to the hundreds of billions of dollars they have already spent this is nothing. By giving this money to the public the economy will get stimulated one way or another. Either by spending on needs or paying off bills. I think we need to get people together and tell the govenerment this is what the american people to to help these bad economic times.

jake
Friday 7:26 pm

Jonathan, you might want to check your math.

1 Billion = 1,000 Million.

234,000,000 people getting $200,000 would cost 46,800,000,000,000 (fourty-six TRILLION, eight-hundred BILLION dollars).

The current U.S. National Debt is roughly 14,500,000,000 (fourteen Trilion, five-hundred Billion) right now. I doubt very strongly that U.S. tax payers want the government to MORE THAN TRIPLE the national debt.

Lynda
Tuesday 8:31 am
I could be wrong in my thoughts but wasn’t the government established to work for the people. So if the government people, who work for us, are doing a shitty job, couldn’t we just fire them like any other corporation who finds out that their employees are stealing from them. We the people pay the government their salaries and all their perks while my family goes hungry. When my daughter needs new shoes and I can’t buy them does the government that I helped pay for care. WELL DAMNIT THEY SHOULD! When my daughter says shes hungry and I open the fridge and its empty does the government care. They are supposed to care enough about us to never let this happen to american people. Our forefathers came over and established this country to get away from being under the rule of “corruption” and to be free of constraints. The… Read more »
connie
Wednesday 2:32 pm
I have sat here and read these broken hearted people who for the most part,have said nothing but the truth. What breaks my heart,is that people have voted all those who are and have been in office ever since the first President,and I read the same reasons time and time again. I will NEVER understand how a government who has been put into office with unbelievable wages they get paid AND the UNBELIEVABLE benefits they endlessly receive can do what they ALL have done to the AMERICAN PEOPLE!!! But what scares me to death, is the fact that they are and have gotten by with it,and NO ONE can stop them. They have brought shame upon the American People,but the errors of their ways have to be tolerated…..I pray that Jesus comes back so quick that the intended life God wanted us to have can be sooner then later……May He… Read more »
connie
Wednesday 2:40 pm

I just want to add,that it is almost impossible to imagine that the evils of the GOVERNMENT from the beginning can just keep adding a different President term after term and wella….History is repeating once more. Why doesn’t the people of our Beautiful America have had,”EVER”, a way to stop what goes on with each President that helps only the people THEY want to help?

[…] under the Recovery Act, for an additional two years as part of President Obama’s compromise tax cut package. The AOTC allows parents and students to receive a tax credit of up to $2,500 for college expenses, […]

[…] the Making Work Pay tax credit. While the Obama administration had touted the 2011-2012 tax cut/new stimulus package extension as legislation that will benefit 95% of Americans, the sad truth is that the tax cut and […]

Michael D
Wednesday 12:38 pm

Want to solve the economic problem? #1. Get out of NAFTA. #2. Bring back pre 1960 tariffs.#3 Resume drilling in the Gulf of Mexico, start drilling off the coast of california and stop exporting Alaskan crude. #4. Reduce foreign aid by 80%. These are just a few of the ideas I have. Maybe they might not be perfect but, they make more sense than anything the idiots in DC have come up with!

[…] approval of a two-year extension to all the Bush-era tax cuts, the 2011 federal IRS tax rates will be the same as 2010 levels. […]

[…] A change to the estate tax exemption was recently passed into law as part of the Bush-era tax cuts extension. The taxable estate exemption thresholds will be $5 million (from $3.5 million in 2009) for an […]

Natalia Payroll
Thursday 5:36 am

I don’t mind paying taxes as long as I can see where it is going to. We work hard for our money, it’s just right that we get our fair share.

[…] Capital gains and losses are classified as long-term or short-term, depending on how long you hold the investment before you sell it. If you hold it more than one year, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term. Short-term capital gains are taxed at ordinary income tax rates up to 35%. Long-term capital gains (assets held for more than one year) are taxed at 5% for taxpayers in the 10% and 15% tax brackets (zero percent starting in 2008) and 15% for taxpayers in the 25%, 28%, 33%, and 35% tax brackets. These rates were extended to 2013. […]

[…] to some of the 2008 stimulus tax breaks, and even has some new tax cuts. You can see more on these extensions here. With this legislation he has essentially created a new 2011 Economic Stimulus package, estimated […]

Mike
Saturday 9:32 pm

Smoke-And -Mirrors, smoke and mirrors. And ALL, WILL, stay the same for ever more.

2011 Payroll Tax Holiday For Employee Social Secruity Contributions as Part of Obama Tax Extension Package
Monday 11:17 pm

[…] part of bush-era tax cuts extension legislation (Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010), a […]

» No Further Extension of $8,000 First Plus New $6500 Existing Home Buyer Tax Credit Approved. 2011 Extensions Available For Certain Groups | Saving to Inve$t
Monday 10:53 pm

[…] October 2010] The Federal Home Buyer Credit has now expired, with no further extensions currently proposed in Congress. But make sure you provide the right documentation if claiming this credit when filing […]

[…] law a bill that covers a $858 billion extension of all the bush-era tax cuts, plus some additional tax benefits. With this legislation he has essentially created a new 2011 Economic Stimulus package, that […]

[…] into law a bill that covers an extension of all the bush-era tax cuts plus some new and extended tax benefits. With this legislation he has essentially created a new 2011 Economic Stimulus package, estimated […]

[…] Andys2i [Updated] As part of bush-era tax cuts extension legislation (Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010), a number of […]

John
Monday 11:07 am

Here’s an easier way to figure the payroll deduction: For every thousand dollars in wages per paycheck up to the cap, one would only have $42 withheld (4.2% x $1,000), rather than $62 (6.2% x $1,000). So for someone on $50,000, the savings would be $20 * 50 = $1000.

[…] andys2i As part of bush-era tax cuts extension legislation (Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010), a […]

andys2i
Sunday 3:08 pm

The extension of the Bush tax cuts also reinstates many provisions scheduled to expire on December 31st, 2010 including:

• The American Opportunity Credit – This allows college students and their parents to save up to $2500 on their taxes.
•Teachers Tax Credit – Teachers who purchase classroom supplies can write off costs up to $250.
• Child Tax Credit – The $1000 child tax credit per child under 17 years-old.

[…] Andys2i [Update] President Obama and Congress have approved a two year extension to all the Bush-era tax cuts. This means that the 2011 federal IRS tax rates will be the same as […]

[…] inflation between 2008 and 2009. To get updates on other tax changes (including 2011 tax brackets, Obama-Bush Tax Cuts Extension and 401K/IRA limits) consider subscribing (free) via Email or RSS to get the latest […]

Gail
Thursday 2:40 pm

Clap, Clap Mr President. You fooled Mitch McConnell and John Boehner, the Republican leaders in Congress, to make a deal which is just a bigger stimulus 2 years before your election.. Political Genius!

oldmanwalking
Wednesday 4:30 pm
WAKE UP AMERICA! Just how would you expect corrupted millionaires to vote on tax cuts? Yes millionaires that you hired to represent you, Ha that a laugh. Rep, Darrell Issa (R-CA) estimated $451 million Rep Jane Harman (D-CA) $435 million speaker Nancy Pelosi (D-CA) $124 million Rep Rosa DeLauro (D-CT est $27 million John Kerry wife Heinz fortune $295 million Mark Warner (D-VA) $283 million Herb Kohl (D.WI) $ 231 million Jay Rockenfeller (D-WVA $136 million Diane Finstein (D-CA) 108 million Minority Leader Mitch McConnell (R-KY) $33 million Sen Ron Wyden (D-OR) $7million Bill Clinton esitmates $200 million Hillary Clinton Estimates $35 Million Pres Obama estimates $7.7 million In 2009 the net worth if house members was $765,010. In the senate 2008 about two thirds of United states senators were millionaires. In 2009 over half of house and senate members reported net worth wealth of more than $1 million, 55… Read more »
Giggler
Wednesday 12:26 pm
I always tend to agree with the negative vibe folks throw out on millionairs and politicians, what I never see though… is a solution… Unfortunately, the voting system is also corrupt, so we won’t be able to fix it through voting. I could think of a few radical ways to solve the issue, but those also bring negative vibes. So instead of seeing folks point out the obvious, I’d like to see more folks point out solutions on how to fix things. Don’t get me wrong, I certainly appriciate reading the input of folks like “oldmanwalking”, but it doesn’t solve any of the issues. Maybe there isn’t a solution? I often feel like we are reliving the Roman Empire, and we are just sitting around, waiting for it to fall… I wish I were intelligent enough to find the solution. However, I’m sure there are those that are, and I’m… Read more »
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