Both the House and Senate passed nearly $5 billion in tax cut bills, aimed at helping victims of Hurricane Katrina and the people who provide them shelter.
The bills have slight differences that will need to be ironed out before moving the legislation to President Bush for his signature. That process is not expected to take long, with both chambers having passed the bills by a voice vote.
The cuts are designed to give people affected by the hurricane easier access to their retirement savings and to encourage charitable giving. Among other provisions, both versions of the plan waive penalties for victims who withdraw cash from their retirement savings accounts, solidify an earned income tax credit for the working poor, and provide a $2,000 tax break to anyone who houses victims for two months or longer.
Other provisions include:
- The extension of a tax credit for employers who keep workers in the disaster zone on their payroll;
- The elimination of a limitation on casualty losses, making it easier for victims to get a refund of taxes they paid in 2004; and,
- An allowance for survivors to exempt from taxes any debts that are canceled because of the hurricane. Canceled debt is usually considered taxable income.
Congress has already approved more than $62 billion in direct aid to help the recovery effort that left hundreds of thousands homeless. Politicians said that they would propose more tax legislation later this year to help rebuild the Gulf Coast. The bills would also make it easier for individuals to donate funds from their individual retirement accounts, and raise the charitable deduction limit for corporations to 15 percent of income. The legislation also would increase the mileage deduction for cars driven for charitable purposes to 24.25 cents per mile, up from 14 cents.
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