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Economic Stimulus: What does the 2008 stimulus act do for individuals?

People who file tax returns for either 2007 or 2008 may qualify to receive "recovery rebates." In total, the rebates will lower federal taxes by about 5 percent in 2008 and reduce the average effective federal tax rate (individual income, payroll, and excise taxes only) from 19.6 percent to 18.6 percent. The rebates will reduce federal revenue by an estimated $107 billion in fiscal 2008 and by another $10 billion in fiscal 2009.

  • Tax filers who are neither dependents nor nonresident aliens receive a basic credit that is the larger of either:
    • $600 ($1,200 for joint filers), but not more than the tax filer’s income tax liability before subtracting child and earned income credits, or
    • $300 ($600 for joint filers) if the tax filer has either (a) at least $3,000 of earnings, Social Security benefits, and veteran’s payments or (b) net income tax liability of at least $1 and gross income greater than the sum of the applicable basic standard deduction and one personal exemption (two personal exemptions for a joint return). That value is $8,750 in 2007 ($17,500 for joint filers and $11,250 for heads of household) and $8,950 in 2008 ($17,900 for joint filers and $11,500 for heads of household).
  • People who qualify for a basic credit may also receive a $300 credit for each child eligible for the regular child credit (typically a related child under age 17 at the end of the year). This is in addition to the regular child credit.
  • The sum of the basic and child credits is reduced by 5 percent of the tax filer’s adjusted gross income over $75,000 ($150,000 for joint filers). See figures 1 and 2.
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    Underlying Data: Download
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    Click here for Table of Rebates for Single Individuals
    Click here for Table of Rebates for Married Couples
    Click here to see Rebate Examples for Single Individuals
    Click here to see Rebate Examples for Married Couples

  • Beginning in mid-2008, individuals who file 2007 tax returns will receive advance recovery rebates based on the information in their returns. They, along with others who receive no advance rebate, will complete a worksheet for their 2008 tax return to recalculate the rebate based on 2008 information. If that recalculation yields a larger rebate than the original calculation, the difference will be credited as a 2008 tax payment. If the recalculation yields a smaller value, the taxpayer does not have to repay the difference.
 
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   Entry 2 of 10