"The president's proposed tax changes could benefit millions of modest-income families by easing child care costs and encouraging them to save," said Amy McAnarney, executive director of The Tax Institute at H&R Block. "The president's proposal also would continue to make higher education more accessible by making the American Opportunity Credit permanent."

1. Child Care Credit
   "Raising the child care credit to 35 percent could mean hundreds of dollars more for modest-income families," McAnarney said. "However, many lower-income families without a tax liability would not benefit from the credit because it would remain non-refundable."
   
   For example, a family with two children making $80,000 a year the credit would increase from $1,200 under the current law to $2,100.
   
   Under the proposal, the minimum child care credit increases from 20 percent to 35 percent for families making less than $85,000 per year. The credit percentage decreases as income rises, until it reaches 20 percent for families with incomes of $115,000 and higher.
   
   
2. Saver's Credit
   "More families who are saving for the future would benefit from a simpler and expanded Saver's Credit," McAnarney said. "Because the proposed credit would be refundable, it will be more valuable to many lower-income taxpayers."
   
   The credit matches 50 percent of the first $1,000 of contributions. Under the proposal, the credit would be expanded to families making over $55,500, up to $85,000. Currently, the credit only applies to those making $55,500 and less.
   
   Also, because the credit would be refundable, more lower-income taxpayers would likely get a larger refund.
   
   
3. American Opportunity Credit
   "Many modest income families are benefitting from an expanded education credit for the first time this year," McAnarney said. "Making the American Opportunity Credit (AOC) permanent would continue to benefit those investing in higher education."
   
   The credit provides a maximum $2,500 for qualifying expenses in the first four years of college. Many are benefitting from an education credit, because unlike the Hope and Lifetime Learning Credits, the AOC is 40 percent refundable for most taxpayers. Currently, the credit only applies in 2009 and 2010.