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Industry > US & World Business Conditions
2008 Tax Stimulus Program
Business Expensing Limit Increased
To encourage new spending by businesses, the bill provides nearly $45 billion in investment incentives. Firms would be allowed to expense 50 percent of the value of new equipment placed in service during 2008 and the limit for expensing under tax code Section 179 would be raised from $128,000 to $250,000 in 2008. The phase-out threshold would also be raised from $510,000 to $800,000 for 2008, according to a Joint Committee on Taxation analysis.
| Comparison: |
1st Year Deduction |
Phase Out Threshold |
| |
Old Law |
New Law |
Old Law |
New Law |
| Small Business 100% expensing (section 179) |
$128,000 |
$250,000 |
$510,000 |
$800,000 |
| Accelerated Bonus depreciation |
- |
50% |
- |
no limit |
| Examples: |
Company's 2008 Total Capital Expenditures |
| Investment |
$100,000 |
$300,000 |
$600,000 |
| Depreciation: |
|
|
|
| 100% Expensing |
$100,000 |
$250,000 |
$250,000 |
| 50% Bonus Depreciation |
- |
$25,000 |
$175,000 |
| Normal 14.286% (7 yr. life) depreciation first year |
- |
$3,571 |
$25,000 |
Total 1st year Expense |
$100,000 |
$278,571 |
$450,000 |
| Tax reduction at 34% |
$34,000 |
$94,714 |
$153,000 |
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