Highlights of Budget Deal
THE budget bill passed Saturday aims to cut $490 billion from the federal deficit over five years. Among its key provisions: Income Taxes: A new top tax rate of 31 percent. That would be an increase from 28 percent for about 600,000 highest income Americans and a cut from 33 percent for about 5.3 million upper-middle-income taxpayers.
Other Taxes: A 5-cent-a-gallon federal gasoline tax increase; a two-stage tax increase on cigarettes, liquor, beer, and wine; a 10 percent surtax on expensive cars, boats, planes, and furs.
Deductions: A 3 percent limit on itemized deductions claimed by taxpayers with adjusted gross incomes higher than $100,000.
Exemptions: Gradual elimination of the $2,050 personal exemption for single people who earn more than $100,000 and couples filing jointly who earn more than $150,000.
State and local employees: Extends Social Security taxes to state and local employees without other pensions.
Income tax credit: A five-year expansion of the earned income tax credit for the working poor.
Oil: $2.5 billion in tax benefits for oil and gas drillers and $1.4 billion in tax breaks for small businesses over five years.
Medicare: About $10 billion savings by increasing the deductible and increasing premiums. About $34 billion in savings through reduced reimbursements to doctors and hospitals.
Medicaid: Savings of about $600 million over 5 years through drug discounts and from paying private insurance if it is cheaper, although providing expanded coverage for children, the frail elderly, and the mentally retarded.