TaxAlmanac:Featured article/December 11, 2006

From TaxAlmanac

Tax Relief and Health Care Act of 2006

Congress recently passed H.R. 6111, the Tax Relief and Health Care Act of 2006. President Bush signed the bill into law on December 20, 2006.

The following Short Summary of Tax and Other Provisions in H.R. 6111 was released by the Committee on Ways and Means.

Extension and Modificaiton of Certain Tax Relief Provisions

The Tax Relief and Health Care Act of 2006 extends through 2007, and in certain circumstances modifies, provisions which either expired at the end of 2005 or will expire at the end of 2006.

• Above-the-line deduction for higher education expenses.
• Extension of new markets tax credit and modification for rural counties.
• State and local sales tax deduction.
• Extension of the Research and Development (R&D) Tax Credit and expansion to enhance alternative methods of determining the credit.
• Extension and expansion of the Work Opportunity Tax Credit (WOTC) for hiring individuals who face barriers to employment – and combination of the credit with the Welfare-to-Work Tax Credit in 2007.
• Welfare-to-Work Tax Credit for hiring individuals who have received public assistance for an extended period of time – and combination with the WOTC in 2007.
• Treating combat pay as earned income for purposes of the earned income credit calculation.
• Authority to issue Qualified Zone Academy Bonds (QZABs) for school modernization, equipment and teacher training in high-poverty areas.
• Above-the-line deduction for out-of-pocket teacher classroom expenses.