Stimulus: How it may affect your wallet

Congress has finalized the $787 billion economic recovery plan. Here's a look at some of the provisions geared at financial relief for individuals.

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By Jeanne Sahadi, CNNMoney.com senior writer

How effective will the $787 billion stimulus plan be in reviving the economy?
  • It will help a lot
  • It will help, but more will be needed
  • It's not nearly enough
  • It costs too much

NEW YORK (CNNMoney.com) -- The final topline price of the economic recovery package: $787 billion. That's below both the $820 billion House-passed version and the $838 billion Senate-passed version.

The compromises that the House, Senate and White House struck to finalize legislation changed the scope of a number of provisions, including those affecting individuals directly. In some cases, they either reduced or expanded a benefit relative to what appeared in the Senate or House versions of the bill.

Here's a look at some of the provisions that will have a direct effect on individuals in their paychecks, on their tax returns, and with regard to their unemployment benefits and health insurance if they've lost a job.

Making Work Pay Credit: The bill provides a credit equal to 6.2% of earnings up to $400 per person (up to $800 per couples who file jointly). The full credit would be paid to people making $75,000 or less ($150,000 per couple). A partial credit would be paid to those making above those amounts but no more than $100,000 ($200,000 for couples).

The credit would also be refundable, which means that even very low-income families who don't make enough to owe income tax would be able to claim it.

For most working individuals, the credit will be paid over time at roughly $15 per period, assuming 26 pay periods in a year. Estimated cost: $116 billion.

One-time payments to those who don't work: For retirees, disabled individuals and others who don't work, the bill provides a one-time $250 payment. Estimated cost: $14.2 billion.

Break for higher income families: The bill includes a one-year provision to protect middle- and upper-middle-income families from having to pay the Alternative Minimum Tax. The AMT was intended primarily for high-income taxpayers but has in recent years threatened to engulf those lower down the income scale. Estimated cost: $70 billion.

Temporary deduction for car buyers: The bill would let those who buy a new car, light vehicle, recreational vehicle or motorcycle in 2009 deduct state and local sales taxes as well as any excise tax charged in the purchase. The deduction would be available to those earning less than $125,000 ($250,000 for joint filers). It will be an above-the-line deduction, meaning even taxpayers who don't itemize may take it in addition to the standard deduction. Estimated cost: $1.7 billion.

Temporary credit for home buyers: The bill increases the size of an existing temporary and refundable first-time home buyer credit to $8,000, up from $7,500. It also removes the requirement under current law that the credit be paid back if the buyer stays in the home for at least three years. And it would extend the credit's expiration date to Dec. 1, 2009, from July 1. Those eligible for this credit must have purchased a home after Jan. 1, 2009, and before Dec. 1, 2009.

The full credit is available to those making $75,000 or less ($150,000 for joint filers). Estimated cost: $6.6 billion.

New temporary college credit: The bill introduces the American Opportunity Tax Credit, which would be in effect for 2009 and 2010. It expands the existing Hope Scholarship tax credit and would be worth as much as $2,500 for higher education expenses, up from $1,800 currently.

The full credit would be available to those making less than $80,000 ($160,000 for joint filers). Those making between those amounts and $90,000 ($180,000 for joint filers) would get a partial credit. And the break would also be partially refundable, meaning lower income families with little or no tax liability could now claim some of the credit. Estimated cost: $13.9 billion.

Temporary Pell Grant increase: The bill increases the maximum Pell Grant by $500 to $5,350 in 2009 and $5,550 in 2010. Estimated cost: $15.6 billion.

Temporary expansion of child tax credit: The bill increases eligibility for the child tax credit by lowering the income threshold that must be met for the credit to be refundable. The threshold would be lowered to $3,000 for this year and next. That will allow lower income families to claim more of the credit than under current law. Estimated cost: $14.8 billion.

Temporary increase in earned income tax credit: The credit will be temporarily increased to 45% from 40% of qualifying earnings for low-income families with three or more children. It also includes a marriage penalty relief provision for couples who qualify for at least a portion of the credit. Estimated cost: $4.6 billion.

Direct lifeline benefits

Health insurance help for the jobless: The bill includes provisions to help eligible jobless workers pay for health insurance under Cobra. Cobra coverage allows newly unemployed workers to keep health insurance provided by their former employers for a period of time.

For workers who have been laid off between Sept. 1, 2008, and Dec. 31, 2009, the government will subsidize 65% of their premiums under Cobra for up to 9 months.

Those people laid off between Sept. 1, 2008, and the day the stimulus law goes into effect, and who did not sign up for Cobra, will get an additional 60 days to do so and receive the subsidy.

The subsidy will be limited to those whose income for the year is $125,000 or less ($250,000 for couples filing jointly). Estimated cost: $24.7 billion.

Another provision provides states funding to help pay for expanded Medicaid rolls due to the rising number of jobless workers. Estimated cost: $87 billion.

Unemployment benefits: The bill extends until Dec. 31 the deadline for when jobless workers who have run out of their regular unemployment benefits may sign up for an additional 20 weeks in unemployment benefits, and 13 weeks on top of that if they live in what's deemed a high unemployment state, of which there are now about 30. Estimated cost: $27 billion.

In addition, the weekly unemployment benefit will temporarily increase by $25 on top of the roughly $300 jobless workers currently receive. Estimated cost: $8.8 billion.

Plus, the first $2,400 of benefits in 2009 would be exempt from federal income taxes. Estimated cost: $4.7 billion.

Food stamp payments: The bill includes a provision would increase food stamp payments by 13.6%, so a family of four would see an additional $80 on top of the $588 per month they receive currently. Estimated cost: $19.9 billion.

The bill also provides assistance to help local groups providing food and shelter, elderly nutrition services such as Meals on Wheels, and a program to help food banks re-stock their shelves. Estimated cost: $350 million.

Other help for needy families: The bill provides funding to states to create a contingency fund through 2010 for the welfare program called Temporary Assistance for Needy Families, which provides cash assistance to the needy. Estimated cost: $2.4 billion.  To top of page

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