Obama Outlines Proposed Tax Credits, Other Changes

President Barack Obama, in a State of the Union address Wednesday that focused heavily on job creation, proposed several business and individual tax credits.

Obama called for a new tax credit for small businesses that hire workers or raise wages as well as the elimination of all capital gains tax on small business investment. He also proposed providing an unspecified tax incentive for businesses willing to invest in new plants and equipment. A separate White House brief said that the president will also propose extending the increased IRC § 179 expensing limit.

Obama also signaled that he will propose to nearly double the child tax credit, to give every worker access to a retirement account and to expand the tax credit under IRC § 25B for those who save for retirement.    

The speech included several proposals related to making a college education more affordable. Obama said he wants to end “taxpayer subsidies that go to banks for student loans. Instead, let’s take that money and give families a $10,000 tax credit for four years of college and increase Pell Grants.”

Finally, the president appeared to signal a willingness to continue some of the tax cuts from 2001 that are scheduled to expire at the end of 2010, but said, “We will not continue tax cuts for oil companies, for investment fund managers, and for those making over $250,000 a year.”