Stimulus Package Article

     On February 7, 2008, Congress approved the tax provisions as set forth in the Economic Stimulus Act of 2008.  The most exciting provision to many Americans as a result of this Act is the rebate checks being mailed throughout the current year.  In addition to the well known rebate checks, this stimulus package also contains two substantial business incentives.

     These incentives are nothing new to the business world.  Both deal with an increase in capital asset deductions.  The first is an increase to the commonly known Section 179 expense.  The maximum allowable deduction on assets placed into service beginning on January 1, 2008 is $250,000.  In order to qualify for the entire deduction, the new capital assets purchased for the taxable year may not exceed $800,000.

     The second incentive available to businesses is the bonus deprecation.  This allows a business to expense 50% of the cost of a new, not used, asset placed into service on or after January 1, 2008.  One additional stipulation on such qualifying assets is the property must have a depreciable method of MACRS (modified accelerated cost recovery system) and a depreciable life of 20 years or less.  Other qualifying property includes water utility assets, off-the-shelf computer software and qualified leasehold improvements.

     Bonus depreciation taken on vehicles classified as luxury autos has also increased to a maximum deduction of $11,060 (cars) and $11,260 (trucks and vans).