The campaigning is over and governing will begin under a new Administration and Congress in January. On January 20, 2009, Barack Obama will take the oath of office as the 44th president of the United States. For the first time in three years, the same party will control the White House and both Houses of Congress. During the campaign, President-elect Obama pledged to cut taxes for the middle class, raise taxes on higher-income individuals and protect retirement savings. The president-elect also appears to support a lower corporate rate so long as business tax "loopholes" are closed.

INDIVIDUALS

During the campaign, Obama promised a "middle class tax cut." "No family making less than $250,000 will see their taxes increase," the president-elect frequently said. Conversely, families making more than $250,000 and individuals making more than $200,000 can expect a tax increase.

The president-elect's middle class tax cut appears to be two-prong. First, Obama will renew the 10, 15, 25, and 28 percent individual tax rates created by EGTRRA but set to sunset after 2010. However, the top two rates under EGTRRA (currently 33 percent and 35 percent, respectively) would revert to 36 percent and 39.6 percent respectively. Second, Obama has proposed a new refundable "Making Work Pay" tax credit to offset the first $8,100 in payroll taxes for lower and middle-income taxpayers. This credit would apparently be capped at $500 per wage earner.

The president-elect also proposed restoring the personal exemption phase-out (PEP) and itemized deduction limitation (Pease limitation) for individuals making over $200,000 and families with incomes above $250,000.

INDIVIDUAL TAX RATES FORECAST

EGTRRA Obama

Income Range
Based on 2008 Tables
single taxpayers			married taxpayers			Current Rates	Forecasted Rates
0	-	8,025	0	-	16,050	10%	10%
8,026	-	32,550	16,501	-	65,100	15%	15%
32,551	-	78,850	65,101	-	131,450	25%	25%
78,851	-	164,550	131,451	-	200,300	28%	28%
164,551	-	357,700	200,301	-	357,700	33%	36%
357,701	-	And up	357,701	-	And Up	35%	39.6%

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