Five Middle Class Tax Breaks

The middle class of America is the perfect spot to be in if you’d like to benefit from a range of tax breaks. Addressing every tax break aimed at the middle class would be impossible because there are far too many; however, below are five of the best.One dollar bill

  1. IRA Contributions

Save for retirement and you could save a lot of money on your tax returns by meeting the contribution limit (over $5,000) each year. This could reduce your earned income by 5% or more.

  1. Energy Efficiency Upgrades

The federal government, and every state government, has rules on making your home more efficient. Spend money to upgrade your home on insulation and energy saving devices and this will lead to another tax break.

  1. Homeowner’s Bargain

The government has a scheme in which you are given $8,000 when you buy your home. This is to help people climb the housing ladder. They will either cut a check or reduce your tax bill. It’s not much for the wealthy, but for the middle classes it’s a nice bonus.

  1. Child Tax Credit

For each child you have, you can get a $1,000 tax break. This keeps on giving annually until your son or daughter turns 17.

  1. Child Care Tax Break

Up to $3,000, you can get a 35% reduction on the cost of childcare. This includes anything from nurseries to summer camps.

Moreover, this applies for all your children. Beware that the percentage you can claim back decreases as your income increases.

Image credit: Alejandro Mallea