| Provision |
Explanation |
| AMT |
AMT exemption amounts expanded to $46,200 ($69,950 MFJ) up from
2007 amounts of $44,350 ($66,250).
Child and Dependent Care Credit, education credits, home energy
credits allowed for both regular tax and AMT.
The portion of unpaid tax, penalties and interest that was
outstanding before Jan. 1, 2008, that is attributable to an ISO
exercise is abated.
Long-term unused minimum tax credit to include previously paid
penalties and interest related to ISO exercises.
Refundable AMT credit modified to the greater of 50% of the
long-term unused credit (up from 20%) or the prior year's credit. |
| Child Tax Credit |
The income threshold for the Additional Child Tax Credit has
been lowered to $8,500 for tax year 2008 only. |
| Long-term Capital Gain |
The 5% net long-term capital gain rate drops to 0% for those
taxpayers who are in the 10% or 15% tax brackets. |
| Real Property Taxes |
Nonitemizers may claim an additional standard deduction for
state and local real property taxes paid for tax years 2008 and
2009. The maximum deduction is $500 ($1,000 MFJ). |
Refundable
First-time
Homebuyer
Credit |
Taxpayers who purchased a principal residence after April 8,
2008, through June 30, 2009, and who have not owned a principal
residence in the previous 3 years may claim a refundable credit for
10% of the purchase price. The maximum credit is $7,500 ($3,750
MFS). Eligibility for the credit phases out for modified AGI between
$75,000–$95,000 ($150,000–$170,000 MFJ). Note: The credit must be
repaid in 15 equal installments starting in 2010. Repayment is
accelerated if the home is sold or no longer used as a principal
residence. |
| Recovery Rebate Credit |
The rebate that was paid in 2008 will be reconciled on the 2008
tax return. Taxpayers will receive any additional credit due, but
don't need to repay any excess credit received. |
| Kiddie Tax |
Kiddie tax now applies to children who are younger than 18,
children who are 18 unless they provide more than half of their own
support based on earned income, and children who are 19 to 23 and
full-time students — unless they provide more than half of their own
support based on earned income. |
| Depreciation |
The maximum Section 179 deduction for tax years starting in 2008
has been increased to $250,000. A phaseout of this amount starts
when more than $800,000 of qualifying property is placed in service
during the tax year. Additional first-year 50% "bonus" depreciation
is the default provision for property placed in service in 2008. |
| Wind Energy Property Credit |
The credit is expanded to include small wind energy property
which uses a small wind turbine to generate electricity. The maximum
credit is $4,000. |
| Section 179 Expense |
The maximum Section 179 deduction for tax years starting in 2008
is $250,000. A phaseout of this amount starts when more than
$800,000 of qualifying property is placed in service during the tax
year. Note: Special rules apply to certain disaster areas. |
| Casualty Losses — Federally Declared Disaster Area |
The 10% of AGI reduction does not apply to personal casualty
losses that occurred in a federally declared disaster area. In
addition, these losses (net of any casualty gain) may be claimed as
an additional standard deduction (no need to itemize). Applies to
disasters occurring in 2008 and 2009. |
| Midwestern Disaster Area Relief |
Significant relief is available to victims of the 2008 severe
storms and flooding that occurred in the Midwest. Special relief is
provided for losses that occurred in the core areas of those
disasters. |
| EIC — Combat Pay Election |
The election to treat nontaxable combat pay as earned income for
EIC purposes was made permanent. |
| Sales Tax Deduction |
The deduction for state and local sales taxes instead of state
and local income taxes was extended through 2009. |
| IRAs — Charitable Contributions |
The exclusion of taxable distributions of up to $100,000 from
IRA funds contributed directly to a charity was extended through
2009. |
| PMI Deduction |
The deduction for mortgage insurance premiums paid on a
qualified residence has been extended through 2009. |
| Tuition and Fees Deduction |
The deduction for up to $4,000 of higher education expenses was
extended through 2009. |
| Nonbusiness Energy Property Credit |
The credit for up to $500 of home improvement costs was NOT
extended for 2008. It was extended for 2009 only. The 2009 credit
includes biomass (corn, wood pellet, etc.) heating systems. |
| Teacher's Education |
The $250 Educator Expense Deduction was extended through 2009. |
Highbaugh Tax 
