Rep. Foster Announces Middle-Class Tax Cut Goes Into Effect Today

Press Release

Rep. Foster Announces Middle-Class Tax Cut Goes Into Effect Today
14th District Families Can Expect $400- $800 This Year

After voting for the American Recovery and Reinvestment Act, which contained one of the largest tax cuts in history, Rep. Bill Foster announced that the Making Work Pay tax credit, a provision of the Recovery Act, will go into effect today.

"The Recovery Act was designed to cut taxes and make targeted investments to spur our economy and create jobs," said Foster. "My constituents are feeling the effects of the current economic downturn, and the Making Work Pay tax credit is a provision that can help them immediately, as it puts money directly into the pockets of middle-class taxpayers."

For 2009 and 2010, the Making Work Pay provision of the American Recovery and Reinvestment Act will provide a refundable tax credit of up to $400 for working individuals and $800 for married taxpayers filing joint returns. The tax credit will phase out for taxpayers with adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly, and is fully phased out for taxpayers with modified adjusted gross income in excess of $95,000 for individuals and $190,000 for married couples.

For people who receive a paycheck and are subject to withholding, the credit will typically be handled by their employers by automatically reducing their withholdings.

"As a strong supporter of tax cuts for the middle-class, I am pleased that this tax provision from the Recovery package has been implemented so quickly," said Foster. "This tax credit will benefit an estimated 4.8 million families in Illinois, giving the average family an extra $800 per year to help make ends meet and get our economy moving."

It is not necessary to submit a Form W-4 to get the automatic withholding change. However, an employee with multiple jobs or married couples whose combined incomes place them in a higher tax bracket may elect to submit a revised W-4 to ensure enough withholding is held to cover the tax for his or her combined income.

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