How You Might Benefit From the Stimulus Package

The numbers for the economic stimulus package and housing plan are mind-blowing – over $1 trillion combined. But what does the plan mean to your wallet? Here are three ways you could benefit…

1. A lower mortgage rate: It used to be all but impossible to refinance if your equity was less than 20% of your home's current value. Now you may be eligible to refinance even if you owe as much as 105% of what the house is worth. To qualify, you must have a loan balance of no more than $417,000 (unless you live in a high-cost area).

2. An insurance safety net: Normally if you lose your job, you'll have to foot the bill to keep your former employer's health insurance coverage. Now the government will pay as much as 65% of your monthly premium for up to nine months for most people who have lost a job since Sept. 1, 2008 (the break phases out for couples who earn more than $250,000).

3. An incentive for a new car: If you buy a new car, SUV, or motorcycle in 2009, you may be able to deduct the state and local sales and excise taxes you pay (couples with an adjusted gross income under $260,000 are eligible). State sales taxes average about 6%, so on a $30,000 car you could write off $1,800, plus any county or local sales taxes.
Some tax-saving scenarios

A single person with no children making between $20,000 and $30,000 would see a 12.5% reduction in his or her tax liability for an annual savings of $453. The same person making between $50,000 and $75,000 would see a 4.6% drop, or $626.

At the upper income ranges, someone with income between $100,000 and $200,000 would see a 2.1% drop, which translates into $706.

With or without children, a married couple filing jointly making between $50,000 and $75,000 could see a 10.5% drop for a savings of $991. Those making between $75,000 and $100,000 would see their tax liability go down 9.1%, or $1,457.

Couples with very high incomes — between $200,000 to $500,000 — could see a 7.5% decline in their tax bill, or $5,645.

Households with children, regardless of the parent's marital status, would see savings on their tax bill averaging 9.7% of their tax liability, or $1,975.

There are many other scenarios and ways the Stimulus package MIGHT affect your wallet, and we'll cover more of those in another report.