House Passes Economic Stimulus Package

On January 29, 2008, the House passed the Recovery Rebates and Economic Stimulus for the American People Bill of 2008 (HR 5140) by a vote of 385 to 35. The legislation includes a recovery rebate credit for 2008, with the basic credit calculated as the greater of (1) net income tax liability not to exceed $600 ($1,200 for joint filers) or (2) $300 ($600 for joint filers) if the individual has either (a) at least $3,000 of earned income or (2) net income tax liability of at least one dollar and gross income greater than the sum of the applicable basic standard deduction amount and one personal exemption (two if a joint return). Any individual qualifying for a basic amount of credit also qualifies for an additional credit of $300 per qualifying child. The refundable recovery rebate credit would be payable in the form of advance rebate checks paid during 2008 based on 2007 tax returns. The legislation also includes a temporary increase in the small business expensing limitations and a special first-year depreciation allowance.

The Senate is working on a different version of the legislation that includes expanded rebate coverage. The Administration supports the House version has warned the Senate not to alter the legislation or the result could delay getting relief pumped as quickly as possible into the economy.