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What Is the Making Work Pay Tax Credit?

Definition: Making Work Pay Tax Credit

The Making Work Pay tax credit is a provision in the economic stimulus bill signed last week, formally known as the American Recovery and Reinvestment Act. While the stimulus package enacted under the Bush administration sent Americans paper rebate checks in the mail, this provision will provide taxpayers with a refundable tax credit that will show up in their paychecks beginning early this Spring.

According to the IRS, the tax credit will be calculated at a rate of 6.2 percent of earned income, and will phase out for taxpayers whose adjusted gross income exceeds $75,000, or $150,000 for married couples filing jointly. The tax credits will come out to a maximum $400 for working individuals and $800 for married taxpayers filing joint returns, and the amounts will be handled through automated withholding changes. For more information on the Making Work Pay tax credit, visit the IRS website.


luna08 luna08 8 years
I agree, ilanac. I live in NJ and (although I do fine with less than this) people making more than $75,000 can still be on the brink. Yearly propert taxes here exceed my sisters' yearly mortgage payments in another state. There are extreme differences in what constitutes 'struggling' by state and region.
ilanac13 ilanac13 8 years
these things are soo frustrating to read. it's hard because making $75k isn't a lot in places like NYC - so even though it helps a little bit for some folks, those who are just getting by now don't get any relief.
bellaressa bellaressa 8 years
I agree with you sorrowja. I am just not sure what effects the stimulus will have long term and short term.
sorrowja sorrowja 8 years
I would rather get the $13 ever paycheck it can go toward making up a bill/savings. Some people will just use the one lump sum and be right back where they started.
cvandoorn cvandoorn 8 years
I heard the same thing as luna08. I'd much rather get a lump sum and sock it away in my savings though!
luna08 luna08 8 years
I think what happens is they withhold less from your paycheck each week. Instead of getting a lump sum in a rebate check, you get a little extra in each paycheck. I heard the average was $13 a week...but don't quote me on this! :)
aimeeb aimeeb 8 years
Ummmm...I'm confused.
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