Barack Obama’s Plans for Income Taxes Right Now

As the newly elected President, Barack Obama has promised to inject as much as $1 Trillion into the economy. That’s $1,000,000,000,000.00! That’s more zeros than the number of cars I used to count on many of the trains I watched go by as a kid – it’s a lot!

But what does that do to the structure of federal income taxes? With that much money expected to be placed into the economy, you would expect that it would have a significant impact on income taxes – either by increasing to pay for some of this massive spending, or a tax decrease that will be considered to be part of the overall package itself.

So what are Obama’s plans for taxes right now? Little has been changed from his original positions, except that there is some discussion from various sources of the potential for an immediate $3,000 tax credit or rebate for every American household. However, this carries an enormous price tag all by itself, that could eat up as much as a third of the entire stimulus package, which has not cleared Congress, and which may have to be reduced to gain passage.

Instead, it is highly probable that a new administration will target cuts, with an expansion of the earned income tax credit, a credit for earned income of less than $90,000 per year, a mortgage credit, expanded college tuition credit, and the child tax credit, all of which were promised during the campaign. Some additional stimulus in the form of investment tax credits, particularly for investments in alternative energy, is also very likely.

The new President will have his hands full trying to devise economic strategy in a very treacherous time. You can expect significant changes in the structure of our tax laws to be part of the plan.

Use these free tax calculators from TurboTax to get a preview of your tax return and tax refund.