The Emergency Economic Stabilization Act of 2008, the “bailout law,” extends a variety of tax breaks that had expired after 2007. Generally, the extensions continue through 2009. Here’s how you can take advantage of the tax goodies under the tree this year.

1. Pay next semester’s tuition.

The bailout law restores the above-the-line deduction for qualified higher education expenses. The maximum deduction is $4,000 for joint filers with an AGI of $130,000 or less ($65,000 for single filers). But the deduction is cut in half to $2,000 for higher-income taxpayers until it disappears completely for an AGI above $160,000 ($80,000 for single filers).

Typically, the next tuition bill for a child in college is due next month.

Tip: Make the payment before Jan. 1. Then you can claim the tuition deduction on your ’08 tax return.

This may be worthwhile if you prepaid the tuition due in January 2008 in December 2007. Reason: You can still realize the tax benefits from paying for two semesters in this year.

2. Buy a ‘big-ticket’ item.

The new law reinstates the optional deduction for state and local sales taxes.

How it works: Instead of deducting state and local income taxes, you can elect to deduct the state and local sales taxes you paid this year. But it usually takes a lot of work to total up the sales taxes on all of your family’s purchases. Alternatively, you can base the deduction on state-by-state tables approved by the IRS.

Tip: Buy the new car or boat you’ve been eyeing. Even if you use the IRS tables, you can tack on the extra sales tax for certain big-ticket items. So you’re not necessarily limited to the standard amount.

3. Give to charity from your IRA.

If you’re age 701/2 or older, the tax law allows you to transfer contributions directly from an IRA to a charity without incurring any tax. The bailout law preserves this tax break for two more years. As before, the annual limit on contributions is $100,000.

Tip: Cover your “required minimum distribution” (RMD). At the very least, give the charity the minimum you’re required to take this year. You won’t owe any tax on that amount (but the donation is nondeductible).

It’s possible that your IRA is flush with cash after selling some stocks or mutual fund shares. Remember that you can’t claim a tax loss in your IRA.

4. Add on property tax deductions.

Earlier this year, the new housing law authorized a onetime tax break for non-itemizers like some elderly relatives. For 2008 only, a non-itemizer could deduct state and local property taxes in addition to claiming the standard deduction. The deduction was limited to the lesser of the property taxes actually paid or $1,000 for joint filers ($500 for single filers).

Now the bailout law extends the special deduction for another year.

Tip: If it helps secure a 2008 deduction, urge relatives to prepay property taxes due in January. This gives them an extra deduction on their tax returns.

Absent other circumstances, it generally makes sense for individuals to accelerate deductions to offset current tax liability. But consider all the implications.

5. Go back into “the lab.”

The new bailout law revives the tax credit for qualified research activities conducted by a business. In addition, it enhances the alternative simplified credit while repealing the alternative incremental credit (SBTS, August 2008).

Among other technical changes, the alternative simplified credit jumps from 12% of the average expenses for the prior three years to 14%.

Tip: Ramp up research activities that will qualify for the credit. Check with your tax pro to ensure your business is on firm ground.

Continue to claim the research credit as part of the general business credit on a corporate return.

6. Hammer away at faster write-offs.

Generally, it takes a long time—39 years to be exact— to write off the cost of most building improvements. However, Congress previously authorized a faster 15-year write-off period for qualified restaurant and leasehold improvements. The bailout law extends this tax treatment through 2009.

Tip: Draw up the blueprints for renovations. Under this tax-law change, you’ll be able to depreciate your costs in less than half the time.

Note that the tax break for qualified leasehold improvements applies to expenditures by both lessors and lessees.

7. Donate business goods to charity.

In the wake of several natural disasters, Congress approved enhanced charitable deductions for businesses donating food for the care of the ill, the needy or infants. It also jacked up deductions for gifts of computers and books made by C corporations to qualified recipients such as schools.

The enhanced deductions for business donations have been reinstated.

Tip: Search for inventory that qualifies for tax benefits. For example, the enhanced deduction for a donated computer is equal to its basis plus one-half of the ordinary income realized had the computer been sold (up to two times basis).