Home and car buyers get tax breaks in stimulus package

— -- These days, most workers would welcome even a small increase in their paychecks. Still, a $400 tax credit probably isn't going to cause a lot of cash-strapped families to do a happy dance around the kitchen table. Most workers will end up with an extra $8 a week.

But the $787 billion economic stimulus package, which President Obama is expected to sign Tuesday, contains numerous provisions that could save you much more than that, depending on your circumstances. Here's a closer look at who stands to gain from the American Recovery and Reinvestment Act:

•First-time home buyers. First-time home buyers are eligible for an $8,000 tax credit. And unlike the $7,500 credit enacted last year, this one doesn't have to be repaid, unless you sell your home within three years.

The credit is available to taxpayers who buy a primary residence between Jan. 1 and Dec. 1, 2009. The credit phases out for taxpayers whose AGI exceeds $75,000, or $150,000 for married couples.

•New car buyers. Purchasers of new cars and trucks will be allowed to deduct sales or excise taxes. This is an above-the-line deduction, so you don't have to itemize to claim it.

The deduction is limited to sales tax on purchases of up to $49,500. The deduction phases out for single taxpayers with adjusted gross income of more than $125,000, and married taxpayers whose AGI exceeds $250,000.

The amount you save will depend on your state sales tax rate and the price of your car or truck. If your state imposes a 4% sales tax and your car costs $40,000, the deduction will reduce your adjusted gross income by $1,600, says tax publisher CCH.

The deduction is limited to car and truck purchases made between the date the bill becomes law and Dec. 31, says Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants. Congress "is trying to get people to buy cars right away," he says.

The bill also expands a tax break for people who take public transit to work. The bill allows employees to set aside up to $230 a month in pretax dollars to cover the cost of a bus, train or van pool, up from $120. Employees were already allowed to set aside up to $230 a month for parking. If the employer subsidizes public transportation, employees can receive up to $230 a month without paying taxes on the benefit.