The recently enacted bipartisan Economic Stimulus Plan contains increased Section 179 expensing for 2008 small business equipment purchases, as well as a one-year 50% bonus depreciation allowance for new machine tools and other equipment ordered and placed in service during 2008.
The boost in Section 179 expensing increases the amount that small businesses can write off for new and used equipment purchases in 2008 from the current $128,000 to $250,000. Moreover, the cap on how much equipment can be purchased to enjoy the write-off has been increased from the current $510,000 to $800,000. It then phases out on a dollar-for-dollar basis between $800,000 and $1,050,000 and it is not available for companies purchasing over $1,050,000 of equipment in 2008. However, companies can finance purchases over $800,000 with an operating lease and may still be able to claim this deduction.
Under the new law, small businesses (whose total equipment purchases in 2008 don't exceed $800,000) can now also expense the first $250,000 for the 2008 tax year (until 1/1/09). The 50% bonus depreciation can then be taken on the remaining basis of the machine, if it is new.
The one-year 50% bonus depreciation means you can write off in 2008 an extra 50% of the cost of your new equipment that you buy and start using in 2008.
Additionally, companies can take their standard depreciation deductions on the adjusted basis of qualified equipment. Machine tools and fabricating equipment are typically depreciated over 7 years.
FINANCING? Tax savings may exceed 1st years payments!
For more information, and to calculate your first year tax write-off, visit the Intech Funding Corp website.
This article is intended for general informative purposes only and is not presented as legal or financial advice. The information has been provided by AMT - The Association for Manufacturing Technology. Please consult a professional for more personalized information.