What Does the Stimulus Plan
Mean for Consumers?

imageIf you’re wondering exactly what the new government stimulus plan might mean for your family and your wallet, you’re not alone. There’s been a nonstop flood of news about the program with very little explanation about how and if it will put more cash in your pocket.

Confused? Here are some of the features of the program and how it might impact you.

First-Time Home Buyer $8,000 Tax Credit on a New Home

If you (and your spouse) are buying a home for the first time, you’re eligible for an $8,000 tax credit, as long as you purchase the home sometime between January 1 and December 1, 2009. Stay in your home for at least three years and you won’t have to repay the credit. Bought a home last year in 2008? You can still claim a $7,500 credit, but you’ll have to repay it (over 15 years).

New Education Tax Credit

School expenses show no sign of dropping, but if you’re the parent of a dependent college student or an independent student, you can claim a credit of up to $2,500 a year to offset the cost of tuition, textbooks and fees in 2009 and 2010.

New Car Sales Tax Deduction

A sales tax deduction on the purchase of new cars and trucks went into effect February 17 and lasts until December 31. As long as you're the first owner of any new car or truck with a gross vehicle weight below 8,500 pounds, you qualify for the deduction.

The deduction covers sales taxes on purchases up to $49,500. If your vehicle costs more, you can claim the deduction on the tax that applies to the first $49,500 of the price.

The $200 Billion Consumer Credit Program

On March 3rd, the government launched a $200 billion program to spur lending for education, auto loans, credit cards and other consumer products by providing financing to investors to buy up the debt. The program’s purpose is to make it easier for Americans to finance purchases at lower rates, which in turn, should get the economy going again.

Known as the Term Asset-Backed Security Loan Facility (TALF), the Federal Reserve is committing itself to buying securities backed by different types of debt, such as credit card, auto, student and small business loans. This will make it easier for consumers to get loans and should help to start easing the credit crunch.

Overall, consumers shouldn’t expect the $787 billion stimulus bill passed by Congress to solve the problems plaguing the economy quickly. However, it could help to control the damage, while offering relief to the unemployed and the uninsured.



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