Congress works on moving extenders package and AMT relief before recess

Congress has been working hard not only on the financial markets rescue plan proposed by the Treasury Department, but also busy trying to pass an extenders package and an alternative minimum tax (AMT) patch. The Senate passed a bill on September 23 to extend a number of temporary tax breaks and provide an AMT patch. The House passed its AMT patch on September 24 and its version of an extenders bill on September 25Extenders package.

The Senate's package of extenders calls for the extension of a large number of temporary tax incentives that have proven very popular over the years, including the research tax credit, the state and local sales tax deduction, the higher education tuition deduction, and tax-free contributions from IRAs to charities. Many of these provisions would be retroactive to the start of 2008. The Senate bill would also lower the refund threshold for the child tax credit to $8,500 for 2008. An $18 billion package of clean energy tax incentives is also included in the Senate's bill.

The latest extenders package proposed by the House includes extending the expiring tax incentives for two years, with payfors. The House bill would provide $15 billion in energy incentives, and provide another $42 billion to extend expiring tax provisions through 2009, including the research tax credit, state and local sales tax deduction, teacher's expense deduction, higher education tuition expense deduction, as well as special rules for active financing income. The bill also includes $2 billion for the refundable child tax credit.

AMT patch

Under the Senate Bill, AMT exemption amounts for individual taxpayers would rise to $46,200 and $69,950 for married couples filing jointly for 2008. The Senate bill would also allow most nonrefundable personal credits to be used against the AMT.

The House approved the Alternative Minimum Tax (AMT) Relief Bill of 2008 on September 24. The AMT Relief Bill is a $64.6 billion measure that would also increase the AMT exemption amount to $69,950 for married joint filers and $46,200 for single filers. It would also provide AMT relief for nonrefundable personal credits, as well as provide relief for AMT payers who have exercised incentive stock options and make changes to the refundable AMT credit.

(H.R. 6049, H.R. 7060)