To amend the Internal Revenue Code of 1986 to make permanent the deduction for State and local sales tax, the deduction for qualified tuition and related expenses, and the deduction for mortgage interest premiums, and to modify to the homebuyer credit.

Summary: American Working Families Tax Relief Act of 2009 - Amends the Internal Revenue Code to make permanent the tax deductions for state and local sales taxes, qualified tuition and related expenses, and mortgage insurance premiums.

Modifies the first-time homebuyer tax credit by: (1) allowing all purchasers of a principal residence, not just first-time homebuyers, to claim such credit; (2) eliminating the requirement to repay credit amounts over a 15-year period; and (3) imposing a recapture requirement for taxpayers who dispose of a residence within 36 months after purchase. Extends such credit through December 31, 2009.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``American Working Families Tax Relief 
Act of 2009''.

SEC. 2. STATE AND LOCAL SALES TAX DEDUCTION MADE PERMANENT.

    (a) In General.--Paragraph (5) of section 164(b) of the Internal 
Revenue Code of 1986 is amended by striking subparagraph (I).
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2009.

SEC. 3. DEDUCTION FOR QUALIFIED TUITION AND RELATED EXPENSES MADE 
              PERMANENT.

    (a) In General.--Section 222 of the Internal Revenue Code of 1986 
is amended by striking subsection (e) (relating to termination).
    (b) Sunset Not To Apply.--Section 901 of the Economic Growth and 
Tax Relief Reconciliation Act of 2001 shall not apply to provisions of, 
and amendments made by, section 431 of such Act (relating to deduction 
for higher education expenses).
    (c) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2009.

SEC. 4. MORTGAGE INSURANCE PREMIUMS TREATED AS INTEREST MADE PERMANENT.

    (a) In General.--Subparagraph (E) of section 163(h)(3) of the 
Internal Revenue Code of 1986 is amended by striking clause (iv).
    (b) Effective Date.--The amendment made by this section shall apply 
to amounts paid or accrued after December 31, 2009.

SEC. 5. EXPANSION AND MODIFICATION OF THE HOMEBUYER CREDIT.

    (a) Extension.--
            (1) In general.--Section 36(h) of the Internal Revenue Code 
        of 1986 is amended by striking ``December 1, 2009'' and 
        inserting ``December 31, 2009''.
            (2) Conforming amendment.--Section 36(g) of such Code is 
        amended by striking ``December 1, 2009'' and inserting 
        ``December 31, 2009''.
    (b) Expansion to All Purchasers of Principal Residence.--
            (1) In general.--Subsection (a) of section 36 of such Code 
        is amended by striking ``who is a first-time homebuyer of a 
        principal residence'' and inserting ``who purchases a principal 
        residence''.
            (2) Conforming amendments.--
                    (A) Subsection (c) of section 36 of such Code is 
                amended by striking paragraph (1) and by redesignating 
                paragraphs (2), (3), (4), and (5) as paragraphs (1), 
                (2), (3), and (4), respectively.
                    (B) Section 36 of such Code is amended by striking 
                ``first-time homebuyer credit'' in the heading and 
                inserting ``home purchase credit''.
                    (C) The table of sections for subpart C of part IV 
                of subchapter A of chapter 1 of such Code is amended by 
                striking the item relating to section 36 and inserting 
                the following new item:

``Sec. 36. Home purchase credit.''.
                    (D) Subparagraph (W) of section 26(b)(2) of such 
                Code is amended by striking ``homebuyer credit'' and 
                inserting ``home purchase credit''.
    (c) Modification of Recapture.--
            (1) Repeal of general recapture rule.--Subsection (f) of 
        section 36 of such Code is amended by striking paragraph (1) 
        and by redesignating paragraphs (2) through (7) as paragraphs 
        (1) through (6), respectively.
            (2) 3-year recapture period.--Paragraph (6) of section 
        36(f) of such Code, as so redesignated, is amended to read as 
        follows:
            ``(6) Recapture period.--For purposes of this subsection, 
        the term `recapture period' means the 36-month period beginning 
        on the date of the purchase of such residence by the 
        taxpayer.''.
            (3) Conforming amendments.--
                    (A) Paragraph (1) of section 36(f) of such Code, as 
                so redesignated, is amended to read as follows:
            ``(1) In general.--If a taxpayer disposes of the principal 
        residence with respect to which a credit was allowed under 
        subsection (a) (or such residence ceases to be the principal 
        residence of the taxpayer (and, if married, the taxpayer's 
        spouse)) before the end of the recapture period, the tax 
        imposed by this chapter for the taxable year of such 
        disposition or cessation shall be increased by the amount of 
        the credit so allowed.''.
                    (B) Section 36(f)(2) of such Code, as so 
                redesignated, is amended--
                            (i) by striking ``paragraph (2)'' and 
                        inserting ``paragraph (1)'', and
                            (ii) by striking the second sentence.
                    (C) Section 36(f)(3) of such Code, as so 
                redesignated, is amended--
                            (i) by striking ``Paragraphs (1) and'' in 
                        subparagraph (A) and inserting ``Paragraph 
                        (1)'',
                            (ii) in subparagraph (B)--
                                    (I) by striking ``Paragraph (2)'' 
                                both places it appears and inserting 
                                ``Paragraph (1)'', and
                                    (II) by striking ``paragraph (2)'' 
                                and inserting ``paragraph (1)'',
                            (iii) in subparagraph (C)--
                                    (I) by striking ``paragraph (2)'' 
                                in clause (i) and inserting ``paragraph 
                                (1)'', and
                                    (II) by striking ``paragraphs (1) 
                                and (2)'' and inserting ``paragraph 
                                (1)'', and
                            (iv) by striking subparagraph (D).
            (4) Conforming amendment.--Subsection (g) of section 36 of 
        such Code is amended by striking ``subsection (c)'' and 
        inserting ``subsections (c) and (f)(4)(D)''.
    (d) Effective Dates.--
            (1) Extension.--The amendment made by subsection (a) shall 
        take effect on the date of the enactment of this Act.
            (2) 1st time homebuyer.--The amendment made by subsection 
        (b) shall apply to purchases on or after the date of the 
        enactment of this Act.
            (3) Modification of recapture.--The amendments made by 
        subsection (c) shall take effect as if included in the 
        amendments made by section 3011(c) of the Housing and Economic 
        Recovery Act of 2008.