Himes Announces Recovery Act Middle-Class Tax Cut to Take Effect TOMORROW
WASHINGTON, DC –Congressman Jim Himes (CT-4) announced that middle-class workers will see an increase in their take-home pay beginning tomorrow, April 1. Individuals earning less than $95,000 and couples making up to $190,000 will benefit from this tax cut created by the American Recovery and Reinvestment Act. The Recovery Act is the largest middle-class tax cut in American history.
“Middle-class families are struggling simply to buy groceries and to pay their mortgages, and the best way we can help our economy is to help them stay on their feet,” said Congressman Himes. “I campaign on the need to offer hard-working families a break on federal taxes, and the Recovery Act meets this challenges head-on by combining middle-class tax cuts with investments to create local jobs.”
The Making Work Pay provision of the Recovery Act provides a refundable tax credit up to $400 for working individuals and $800 for married taxpayers filing joint returns through 2010. For workers who receive a paycheck and are subject to withholding, the credit will typically be handled by their employers through automated withholding changes made by tomorrow. If a worker is eligible for the maximum amount of the tax credit, and their employer begins using the revised tax tables starting April 1, that worker can expect to bring home an additional $44 each month as a single filer and $89 as joint filers.
Some workers may have already seen the increase in take-home pay because the Internal Revenue Service (IRS) withholding tables were already updated to reflect the new credit. Because the tax change is retroactive to January 1, in some cases, employees will have no federal tax deducted in recent paychecks.
It is not necessary to submit a 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 there is enough withheld to cover the tax for his or her combined income. IRS Publication 919 provides additional guidance for tax withholding.