Millions of taxpayers, thousands of businesses, and groups as diverse as solar power developers and disaster victims will see tax relief with the a $700billion financial rescue plan.
The tax relief package attached to the rescue bill promotes renewable energy and extends dozens of tax breaks from the critical research and development tax credit to breaks for such narrowly focused groups as motorsports racetrack owners, film producers and bicycle commuters.
The renewable energy part of the package alone, House Speaker Nancy Pelosi said, will “create and save half-a-million good-paying jobs in America immediately.”
Nearly all of the tax breaks already existed. But many expired Jan. 1 for the current tax year, and others expire in three months unless renewed.
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The largest group of beneficiaries is about 20 million mainly upper-middle income taxpayers. Without congressional action, the AMT, which originally was to affect only the very rich, would add some $2,000 this year to the tax bill of these people, most earning under $200,000 a year.
Thousands of businesses await renewal of the research and development tax credit, which expired at the end of last year. Without it, advocates say, high-tech, biotech and aerospace firms would have trouble hiring the highly skilled workers needed to compete with foreign rivals.
The Information Technology Association of America reports an $18.5 billion dip in R&D activity since the start of the year, when the credit lapsed. The extension would cost $19 billion over 10 years. The cost of the bill's entire tax portion is near $110 billion.
Renewable-energy incentives include an eight-year extension of investment credits for solar, as well as breaks for wind, geothermal and other alternative sources. The solar industry says extending the credits through 2016 would create an extra 440,000 jobs and over $230 billion in investments.
The measure also has $8 billion in tax breaks for disaster victims, $5 billion for higher education tuition deductions and $400 million in deductions for teachers who buy supplies with their own money.
There are $3 billion in deductions for residents of states without income taxes that have state and local sales taxes.