The White House and House leaders moved one step closer to approving an economic stimulus package today as both sides reached an agreement on the plan's outline. The package, which focuses both on rebates for taxpayers and tax incentives for businesses, is now pending approval by the House and Senate, as well as the president's signature. Here's what consumers should know.
How big will my check be?
The proposed package includes up to $600 for single taxpayers and $1,200 for married couples, plus an extra $300 per child. Those who did not pay federal income taxes in 2007 are eligible for $300 per person or $600 per married couple as long as they earned more than $3,000 for the year. High earners are out of luck: The program will be phased out for single taxpayers earning over $75,000 and married couples earning more than $150,000.
When will I get it?
If the deal is approved quickly, people can probably expect their checks by July.
Do I need to pay taxes on it?
No. Rebates are a form of tax relief, according to a Treasury Department spokesman, so they are not taxable.
What are people going to do with the money?
If history is any guide, paying off debt will be the most popular response. Researchers at the University of Michigan studied consumer behavior after $300 and $600 rebates were sent to taxpayers in 2001. They found that almost half of recipients used the money to pay down debt, while 27 percent saved most of it, and 25 percent spent most of it. Spending increased with age, with almost 36 percent of those over the age of 65 choosing to spend most of their rebate.