The American Recovery and Reinvestment Tax Act passed into law on February 9, 2009 made temporary tax changes effective for tax years 2009 and 2010. The temporary carry forwards to tax year 2010 include “The Making Work Pay Credit”. This is a $400 or $800 refund credit that eligible workers can receive by reducing their payroll tax withholdings. The credit is then used to offset their final tax bill upon calculating their 2010 tax obligation.

Additional changes have been made via the American Opportunity Tax Credit, which expanded the education credits available for qualified tuition and related expenses for higher education expenses.

Improved energy tax breaks have been expanded for existing homes and purchases of new vehicles. The tax credit is now 30% of the costs for qualified small wind energy property, and qualified geothermal heat pumps. Additionally for vehicles bought after February 17, 2009 and before January 1, 2012, the law allows for a 10% nonrefundable personal credit for electric drive low speed vehicles, motorcycles, and three wheeled vehicles.

Read more 2010 Tax Facts