On October 3, 2008, the House of Representatives passed the so-called “bailout bill”, designed to avoid a further deepening of the economic crisis, and President Bush has already signed the bill. To make the proposals more acceptable to some members of Congress, some provisions were added that affect the tax liability of individuals. Here is a brief summary of a few of those changes.

1. The provision permitting individuals age 70 1/2 or older to make direct transfers from individual retirement accounts to charities, in amounts up to $100,000 per year, has been extended to the end of 2009.

2. The ability to deduct state and local sales taxes in lieu of state and local income taxes has been extended to the 2009 tax year.

3. The deduction for qualified tuition and related expenses, within certain income limits, has been extended through tax year 2009.

4. The deduction for certain expenses of elementary and secondary school teachers has been extended through tax year 2009.

5. The exemption from the alternative minimum tax has been extended and increased. For joint filers and surviving spouses, the exemption is $69,950 for 2008, up from $66,250 for 2007. For others, the exemption for 2008 is $46,200 for 2008, up from $44,350 in 2007. Without this extension and increase, millions of additional taxpayers would become subject to the AMT.