This year, millions of middle-class families will find the tax burden lighter and bigger refund checks in their mailboxes. That’s because the Recovery Act reduced taxes by almost $100 billion last year and by $220 billion this year. For American families, that translates into significantly lower taxes and larger tax refunds.  In fact, refunds are up an average of $260, a 10 percent increase this year.  As you file your tax returns, I hope you’ll keep in mind the many new credits and deductions.
                                      
The Recovery Act was passed to help our economy start creating jobs again. It invested in needed infrastructure projects across the nation, helped those hardest-hit by the recession, and kept police officers, firefighters, and teachers on the job serving our communities.  It provided 40% tax cuts to help businesses start hiring again and provide relief to middle-class families struggling in the recession.

How do those low taxes benefit you? This year, as you’re filing your taxes, remember that you might be eligible for these benefits:

•    Making Work Pay credit: 95% of working families are receiving this credit, which means $400 less in taxes for individuals and $800 less for married couples. You’ve probably already seen the effects of this credit in your paycheck.
•    College expenses: Families and students can claim up to $2,500 to pay for college expenses.
•    First home purchase: If you have bought your first home by April 30 of this year, you can claim an $8,000 deduction. And many other homebuyers can claim a deduction, as well.
•    Energy efficiency incentives: If you’ve made your home more energy efficient through steps like adding insulation or energy-efficient windows, you’re probably already saving money on your energy bills. But now, you can also claim a $1,500 tax credit.
•    New vehicle purchases: If you bought a new vehicle between February 17 and December 31 of last year, you can deduct the state and local sales taxes from your federal tax return.
•    Family tax credits: If you’re a moderate-income family, the Recovery Act increased your tax credits: the Earned Income Tax Credit is now $5,657, and it’s now easier to claim the Child Tax Credit.
•    Tax-free unemployment benefits: Unemployment benefits are usually taxable—but if you were looking for work last year, the Recovery Act made the first $2,400 in unemployment benefits tax-free.
•    Small business and family farm benefits: The Recovery Act spurs investments in small businesses by cutting the capital gains tax on investors in small businesses who buy stock (in the next two years) and hold it for more than five years. The Act also extends enhanced small business expensing, which doubles the amount small businesses can immediately write off their taxes for capital investments and purchases of new equipment made in 2009 from $125,000 to $250,000 and increases cash flow by providing a 5-year carryback of 2008 net operating losses for small businesses.

For an easy way to see which tax benefits are available to you, check out the Tax Savings Tool at www.whitehouse.gov/recovery.  

These are still the hardest times we’ve seen in decades, and America has a long way to go before its economy is fully back on track. But we’ve made real progress—and these tax cuts are part of the reason why. I hope you’ll take full advantage of them this year.