Stimulus Act of 2008
Economic Stimulus Act of 2008 and Section 179
In order to address concerns regarding a slowing economy, President Bush asked Congress to come up with an Economic Stimulus Plan that will benefit both consumers and businesses, and Congress responded with a comprehensive economic stimulus package.
On February 13, 2008, President Bush signed H.R. 5140, otherwise known as the Economic Stimulus Act of 2008. The Economic Stimulus Act immediately grabbed headlines because most Americans would receive a check for $600 from Uncle Sam. While the Economic Stimulus Act is a boon for consumers, there are significant benefits in the Economic Stimulus Act for businesses as well.
In fact, Small Business stands to benefit a great deal from the Economic Stimulus Act of 2008. This is because the Section 179 Deduction limits have been generously increased, and small businesses across the country will reap the rewards.
How your business will benefit from the Economic Stimulus Act of 2008
The Section 179 Deduction has been significantly enhanced by the Economic Stimulus Act of 2008, and has given businesses an incentive to invest in themselves by purchasing or leasing new equipment.
The specific impact the Economic Stimulus Act has had on the Section 179 deduction is related to the dollar limits of the deduction. The previous dollar limits were a $125,000 limit on the deduction and the total amount of equipment purchased could not exceed $500,000. The Economic Stimulus Act raise these limits significantly. The new deduction limits are $250,000 on the deduction, and the total amount of equipment purchased cannot exceed $800,000.
To recap the new limits:
2007 Deduction Limit: $125,000
2008 Deduction Limit: $250,000
2007 Total Amount of Equipment: $500,000
(deduction decreases dollar for dollar after reached)
2008 Total Amount of Equipment: $800,000
(deduction decreases dollar for dollar after reached)
Bonus Deduction
Another change that the Economic Stimulus Act of 2008 brings to Section 179 is it offers a one-time �bonus first year depreciation� of 50% on qualifying equipment. This is after the above deduction limit is reached.
In other words, if you buy enough equipment to exceed the $250,000 deduction, you can take a �bonus� 50% depreciation on the rest � this is in addition to normal depreciation.
Everyone Benefits
Most small and medium-size businesses will find these new dollar limits generous indeed. The Economic Stimulus Act is going to help consumers, and it will also significantly help most small businesses as well by lowering the cost of equipment that they need to purchase or lease to run their day-to-day operations. To see how much you can save, use this Section 179 tax calculator.
Act Now
As of this writing, this is a one-year increase. Unless it is extended, the older limits will go into effect for 2009, so if you want to take advantage of the higher limits, you need to act in 2008.
Section 179 Deduction
What is the Section 179 Deduction?? Most people think the Section 179 Deduction is some arcane or complicated tax code. It really isn't, as the following will show you.
Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It's an incentive created by the US Government to encourage businesses to buy equipment and invest in themselves. It is sometimes referred to as the "SUV Tax Loophole" or the "Hummer Deduction" because many businesses have used this tax code to purchase qualifying vehicles (like SUV's and Hummers.)
Essentially, Section 179 works like this:
When your business buys certain pieces of equipment, it typically gets to write them off a little at a time through depreciation. In other words, if your company spends $50,000 on a vehicle, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example.)
Now, while it's true that this is better than no write off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it.
In fact, if a business could write off the entire amount, they might add more equipment this year instead of waiting. That's the whole purpose behind Section 179. See the following graphic for an example of the savings that are available to you.
Limits of Section 179
Section 179 does come with limits - there are caps to the total amount written off ($250,000 in 2008), and limits to the total amount of the equipment purchased ($800,000 in 2008.) The deduction begins to phase out dollar for dollar after 800k, so this makes it a true small and medium-sized business deduction.
However, in 2008, businesses that exceed the $250k deduction limit can take a bonus depreciation of 50% on the amount that exceeds the limit. And then also take normal depreciation on the rest. Nice.
Who Qualifies for Section 179?
All businesses that purchase or finance less than $800,000 in business equipment should qualify for the Section 179 Deduction. In addition, most tangible goods qualify for the Section 179 Deduction (see list of qualifying equipment). Also, to qualify for the Section 179 Deduction, the equipment purchased must be placed into service between January 1, 2008 and December 31, 2008.
The deduction begins to phase out if more than $800,000 of equipment is purchased - in fact, the deduction decreases on a dollar for dollar scale after that, making Section 179 a deduction specifically for small and medium-sized businesses.
Economic Stimulus Act of 2008 and Section 179
In order to address concerns regarding a slowing economy, President Bush asked Congress to come up with an Economic Stimulus Plan that will benefit both consumers and businesses, and Congress responded with a comprehensive economic stimulus package.
On February 13, 2008, President Bush signed H.R. 5140, otherwise known as the Economic Stimulus Act of 2008. The Economic Stimulus Act immediately grabbed headlines because most Americans would receive a check for $600 from Uncle Sam. While the Economic Stimulus Act is a boon for consumers, there are significant benefits in the Economic Stimulus Act for businesses as well.
In fact, Small Business stands to benefit a great deal from the Economic Stimulus Act of 2008. This is because the Section 179 Deduction limits have been generously increased, and small businesses across the country will reap the rewards.
How your business will benefit from the Economic Stimulus Act of 2008
The Section 179 Deduction has been significantly enhanced by the Economic Stimulus Act of 2008, and has given businesses an incentive to invest in themselves by purchasing or leasing new equipment.
The specific impact the Economic Stimulus Act has had on the Section 179 deduction is related to the dollar limits of the deduction. The previous dollar limits were a $125,000 limit on the deduction and the total amount of equipment purchased could not exceed $500,000. The Economic Stimulus Act raise these limits significantly. The new deduction limits are $250,000 on the deduction, and the total amount of equipment purchased cannot exceed $800,000.
To recap the new limits:
2007 Deduction Limit: $125,000
2008 Deduction Limit: $250,000
2007 Total Amount of Equipment: $500,000
(deduction decreases dollar for dollar after reached)
2008 Total Amount of Equipment: $800,000
(deduction decreases dollar for dollar after reached)
Bonus Deduction
Another change that the Economic Stimulus Act of 2008 brings to Section 179 is it offers a one-time �bonus first year depreciation� of 50% on qualifying equipment. This is after the above deduction limit is reached.
In other words, if you buy enough equipment to exceed the $250,000 deduction, you can take a �bonus� 50% depreciation on the rest � this is in addition to normal depreciation.
Everyone Benefits
Most small and medium-size businesses will find these new dollar limits generous indeed. The Economic Stimulus Act is going to help consumers, and it will also significantly help most small businesses as well by lowering the cost of equipment that they need to purchase or lease to run their day-to-day operations. To see how much you can save, use this Section 179 tax calculator.
Act Now
As of this writing, this is a one-year increase. Unless it is extended, the older limits will go into effect for 2009, so if you want to take advantage of the higher limits, you need to act in 2008.
Section 179 Deduction
What is the Section 179 Deduction?? Most people think the Section 179 Deduction is some arcane or complicated tax code. It really isn't, as the following will show you.
Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It's an incentive created by the US Government to encourage businesses to buy equipment and invest in themselves. It is sometimes referred to as the "SUV Tax Loophole" or the "Hummer Deduction" because many businesses have used this tax code to purchase qualifying vehicles (like SUV's and Hummers.)
Essentially, Section 179 works like this:
When your business buys certain pieces of equipment, it typically gets to write them off a little at a time through depreciation. In other words, if your company spends $50,000 on a vehicle, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example.)
Now, while it's true that this is better than no write off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it.
In fact, if a business could write off the entire amount, they might add more equipment this year instead of waiting. That's the whole purpose behind Section 179. See the following graphic for an example of the savings that are available to you.
Limits of Section 179
Section 179 does come with limits - there are caps to the total amount written off ($250,000 in 2008), and limits to the total amount of the equipment purchased ($800,000 in 2008.) The deduction begins to phase out dollar for dollar after 800k, so this makes it a true small and medium-sized business deduction.
However, in 2008, businesses that exceed the $250k deduction limit can take a bonus depreciation of 50% on the amount that exceeds the limit. And then also take normal depreciation on the rest. Nice.
Who Qualifies for Section 179?
All businesses that purchase or finance less than $800,000 in business equipment should qualify for the Section 179 Deduction. In addition, most tangible goods qualify for the Section 179 Deduction (see list of qualifying equipment). Also, to qualify for the Section 179 Deduction, the equipment purchased must be placed into service between January 1, 2008 and December 31, 2008.
The deduction begins to phase out if more than $800,000 of equipment is purchased - in fact, the deduction decreases on a dollar for dollar scale after that, making Section 179 a deduction specifically for small and medium-sized businesses.
