The legislation, H.R. 598, passed the Committee by a party-line vote of 24 to 13. The legislation will now be combined with other components of the recovery package from other House Committees into H.R. 1, the American Recovery and Reinvestment Act for consideration by the full House of Representatives next week.

“This legislation will provide critical benefits and incentives to middle-America, poor-America, and businesses, large and small, who are struggling during this economic downturn,” said Committee Chairman Charles B. Rangel.

"Simply put, the American people cannot keep the engine of our economy running if they don’t have money to spend and this package provides tax relief and critical benefits to help them take home a little more each month and help the economy grow," he added.

The tax provisions included in The American Recovery and Reinvestment Plan will provide approximately USD275bn in tax relief for individuals, businesses, and State and local governments.

For individuals there will be a host of tax credits available under the legislation, including the 'Making Work Pay' tax credit, an increase in the earned income tax credit, wider eligibility for the refundable portion of the child tax credit, an 'American Opportunity' education tax credit, and a refundable first-time homebuyer tax credit.

For businesses, the legislation extends bonus depreciation and enhanced small business expensing for capital expenditures incurred in 2009, extends the loss carryback period from two to five years, and provides incentives for businesses to hire veterans and "disconnected youth."

The tax element of the legislation also repeals the Section 382 Notice issued by the Treasury Department last year which liberalized rules in the tax code that are intended to prevent taxpayers that acquire companies from claiming losses that were incurred prior to the acquisition.