On Feb. 17, President Obama signed into law the American Recovery and Reinvestment Act of 2009.

This massive piece of legislation sets in motion numerous tax incentives and direct spending opportunities that will help enable the U.S. economy out of recession. The range of tax credits and deductions provided by this act affects people and businesses at all levels.

Here are a few highlights of the tax incentives for individuals and families.

4 Making Work Pay Tax Credit — For 2009 and 2010, wage earners and self-employed individuals can claim a tax credit equal to the lesser of 6.2 percent of earned income or $400 for single taxpayers and $800 for married taxpayers. This credit is subject to phase-out limitations for adjusted gross income exceeding $75,000 for single filers and $150,000 for joint filers. Most taxpayers will see the effects of this credit in their paycheck.

4 First Time Homebuyer Credit — The new law expands the 2008 credit allowed for first time homebuyers. The maximum credit is increased to $8,000, and any required repayment to the Internal Revenue Service is eliminated. Qualifying purchases are principal residences purchased between Jan. 1, 2009, and Nov. 30, 2009. Phase-out limitations begin with AGI exceeding $75,000 for single filers and $150,000 for joint filers.

4 New Vehicle Deduction — Buyers of new cars, light trucks, SUVs, motorcycles or motor homes after Feb. 17, 2009, through Dec. 31, 2009, are allowed an above-the-line deduction for state and local sales taxes or excise taxes paid on the purchase. The deduction is limited to 1) the taxes on the first $49,500 of the purchase price of any one vehicle and 2) phase-out limitations of AGI exceeding $125,000 for single filers and $250,000 for joint filers.

4 Earned Income Tax Credit — There is a temporary increase in the earned income tax credit for taxpayers with three or more children, and the phase-out limits are increased to eliminate the marriage penalty. The temporary increase applies only to the tax years 2009 and 2010.

4 Child Tax Credit — The popular child tax credit is expanded to more families in 2009 and 2010 by reducing the minimum earned income amount to $3,000. AGI phase-out limitations apply to this refundable credit, starting at $75,000 for single filers and $110,000 for married filers.

4 American Opportunity Credit — The new credit is an expansion of the existing Hope Credit for college tuition and fees. For 2009 and 2010, this credit broadens the range to include higher income taxpayers and to those who owe no tax. It also adds required course materials to the list of qualifying expenses. The maximum credit is increased to $2,500. This credit is available for four post secondary education years instead of two.

4 Unemployment Compensation — Up to $2,400 in unemployment benefits can be excluded from income in 2009.

4 Economic Recovery Payment — For 2009 only, a $250 one-time payment will be offered to social security recipients, veterans, and railroad retirees.

4 Qualified Tuition Programs — Computers and computer technology can be claimed as qualified education expenses in 529 education plans for 2009 and 2010.

4 Extension of Alternative Minimum Tax Relief for 2009 — The extension increases the AMT exemption amount to $46,700 for single filers and to $70,980 for joint filers.

In conclusion, the new law made over 300 changes to the Internal Revenue Code. Lowering your taxes start with looking ahead and proper planning before yearend.

Denise H. Seale is a CPA at Silas Simmons, LLP in Natchez. She can be reached at 601-442-7411.