October 24, 2014

How tax cut & jobless bill affects YOU

Now that Congress has approved, and sent to President Obama for signing, the compromise tax cut and jobless benefits legislation, the question UTU members have, is, “What does it mean for me?”

  • For the jobless — and there are currently some five applicants for every available job in the nation — long-term federal unemployment jobless benefits are extended through Dec. 31, 2011.

These federal-aid benefits begin after an initial 26 weeks of state-provided jobless benefits. The federal benefits extend the 26 weeks of state-provided jobless benefits to 60 weeks in states with unemployment rates of less than 6 percent; and to 99 weeks in states where unemployment rates top 8.5 percent. It is estimated that some 3 million Americans have exhausted their initial 26 weeks of unemployment benefits.

  • Social Security taxes — and Tier I Railroad Retirement taxes — will be cut by two percentage points for employees for the entirety of 2011. The reduced payroll taxes — from the current 6.2 percent to 4.2 percent — are expected to boost the economy through increased spending by workers.

For workers earning $50,000 annually, the additional take-home pay from reduced payroll taxes will be some $1,000 over the course of the year. For those earning the maximum Social Security (and Tier I Railroad Retirement) taxable income, the additional take-home pay will top $2,000.

Additionally, the legislation:

  • Prevents income taxes from rising for millions of middle-class Americans — a tax increase that could have topped $3,000 per middle-class family.
  • Provides millions of middle-class American families with relief from the alternative minimum tax, which otherwise would have hit 28 million households instead of the current 4 million households.
  • Extends the dependent child-care credit, extends an increase in the adoption tax credit, and extends education tax credits (including an additional deduction for interest on student loans).
  • Extends relief from the so-called marriage penalty by increasing the standard deduction for joint filers to twice the standard deduction available to single filers.
  • Extends tax credits for energy efficient improvements to homes.

The legislation also provides tax relief for short line railroads that invest in their properties. The tax relief encourages more investment by short lines, protecting jobs of short line rail workers as well as Class I workers that benefit from the interchange traffic flowing to and from short lines that otherwise would travel by highway.