Last minute tax legislation

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FROM: http://www.timesleader.com/mld/miamiherald/news/nation/16205823.htm?source=rss&channel=miamiherald_nation

WHAT THEY FINISHED
Highlights of last-minute legislation, including tax and trade provisions, before Congress adjourned for the year. The House passed bills that:

• Allow taxpayers with incomes of $65,000 or less ($130,000 for couples filing a joint return) to deduct $4,000 for higher-education costs. The deduction is $2,000 for those earning up to $80,000 (or $160,000 with joint returns). The cost is $3.3 billion over two years.

• Extend through 2007 a research and development tax credit that offers a 20 percent credit for new activities. The cost is $16.3 billion over five years.

• Extend through 2007 the welfare-to-work tax credit under which employers can get a maximum credit of $3,500 for the first year of employing a person who has received public welfare.

• Extend through 2007 the deduction of up to $250 for teachers who personally buy classroom supplies. The two-year cost is $379 million.

• Extend through 2007 the option of taxpayers from states with limited or no income taxes to deduct state and local sales taxes. The nine affected states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. The cost is $5.5 billion over two years.

• Extend permanent normal relations with Vietnam, ending the Cold War rule that trade relations with the communist nation must be renewed every year.

• Block plans to reduce by about 5 percent what Medicare pays to doctors, at a cost of about $4.5 billion.

• Provide a one-year extension of an exception process under which Medicare will pay for stroke or hip replacement therapy when costs exceed $1,740.

• Open up about 8.3 million acres along the Gulf of Mexico to oil and gas drilling 125 miles from the Florida Panhandle. The Senate also approved the measure early Saturday morning.