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Report From Congress

Date: Jan. 1, 2007
Issues: Technology and Communication Business and Consumers Entitlements and the Safety Net Taxes Health Insurance Higher Education Energy


REPORT FROM CONGRESS

WICKER TOUTS ACTION EXTENDING TAX RELIEF

Congress took action in the closing days of the session to renew several expiring tax relief provisions. The legislation prevents tax increases on 19 million families and businesses, allowing Americans to keep more of the money they earn and continuing incentives to spur innovation and job creation.

Extending these wide-ranging provisions allows individuals, families, and business to make financial plans with the knowledge that the tax relief they have counted on will continue to be available.

Among the key tax relief provisions to be extended:

* COLLEGE TUITION DEDUCTION. Taxpayers may deduct up to $4,000 (depending upon income) on higher education expenses. This tax break may be claimed by all taxpayers regardless of whether they itemize or file E-Z returns. It was extended through December 2007. Nearly four million individuals and families used this deduction according to the latest Internal Revenue Service statistics.

* RESEARCH AND DEVELOPMENT BOOST. These provisions have created incentives for businesses to invest in new technology and innovation, creating jobs and greater economic opportunity.

* TEACHER CLASSROOM EXPENSES. School teachers will continue to be able to deduct up to $250 in out-of-pocket costs incurred in the purchase of books, supplies, and other classroom equipment. The IRS reports that 2.6 million teachers across America take advantage of this tax break.

* WELFARE-TO-WORK CREDIT. The welfare-to-work program is helping many Americans break free from the welfare system and become productive members of society. The two-year credit goes to employers hiring individuals who have been on public assistance for an extended period.

* MEDICAL SAVINGS ACCOUNT INCENTIVES. Medical savings accounts will continue to be an attractive and important option with renewal and enhancement of the credit allowing individuals to make tax-free contributions and withdraw funds tax-free if used to pay for eligible medical expenses.

* ENERGY CONSERVATION MEASURES. Builders get credits by meeting a 50 percent energy reduction standard for residential homes and commercial buildings. Individual homeowners can gain a 30 percent tax credit by purchasing residential solar water heating, solar electric equipment and fuel cell equipment through December 2008.

http://www.house.gov/wicker/TaxRelief2.htm

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