How Congress’ $622B tax package could affect your wallet

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HUNTSVILLE, AL- Thursday, the House approved a $620 billion tax package, the most sweeping changes to tax policy since 2012.  The bill extends dozens of tax credits that were set to expire.

The bill is 223 pages and covers a ton of territory, so we'll break down the parts that are most likely to affect us here in the Tennessee Valley.

Beginning with low-income parents, parts of the bill are designed to help working parents by making tax credits for those earning below a certain salary permanent. The Earned Income Tax Credit applies to:

  • $14,340 ($19,680 married filing jointly) with no qualifying children;
  • $37,870 ($43,210 married filing jointly) with one qualifying child;
  • $43,038 ($48,378 married filing jointly) with two qualifying children;
  • $46,227 ($51,567 married filing jointly) with three or more qualifying children.

TaxCorp President Vern Gohanna explains the benefit.

"The earned income credit is where you're working, so you're getting a little bit extra money presumed to help you with expenses. Most parents can look, if you have a family of three children and you're married... you can see somewhere around a $5,300 earned income credit," said Gohanna.

College students, the package brings good news for you, making the American Opportunity Credit-- which offers a $2,500 credit for education expenses like books and living -- permanent.

"It's a tremendous benefit, especially to independent students," said Gohanna.  "Huntsville has a large community of independent students and they're out there struggling making $10-12 per hour and that thousand dollar credit every year can go a long way."

The single biggest tax break deals with businesses.  The generous R & D tax credit for research and experimentation, which has always been temporary, will now be permanent as well.  This will save businesses $113 billion  over the next decade, something Huntsville's large defense industry can look forward to.

"If you have a defense contractor company or a small start-up that makes less than $50 million, you'll be able to take that R & D credit that you're using for research and development and offset things like payroll taxes, so that will really improve the business climate for lots of Huntsville companies," said Gohanna.