On February 13, 2008, the President signed into law the Economic Stimulus Act of 2008. This Act contains several incentives for both individuals and businesses, with the anticipated result being an increase in consumer spending.
Tax Rebate
To receive the highly-promoted tax rebate, you must file a 2007 federal income tax return, even if you are not otherwise required to file a return due to low income. In most cases, the rebate will amount to $600 for individuals ($1,200 for taxpayers who file a joint return), with a minimum of $300 for individuals ($600 for taxpayers who file a joint return). Parents and anyone else eligible for a stimulus rebate will also receive an additional $300 for each qualifying child. The rebates are reduced by 5% of adjusted gross income in excess of $75,000 for individuals ($150,000 for taxpayers who file a joint return). The Act notes that retirees and veterans receiving only Social Security income or disability compensation are eligible for the credit; however, a 2007 return must be filed showing at least $3,000 of this qualifying income.
Increased §179 Expensing for Businesses
The Act increases the amount of 2008 §179 expense to $250,000 (previously $128,000). It also increases the threshold of property expenditures for reducing the deduction to $800,000 (previously $510,000). As a reminder, under this expensing election, a taxpayer can deduct costs immediately, rather than depreciating them over several years. The property must be purchased and placed in service in tax years beginning in 2008. A taxpayer must have taxable income for the year the property is placed in service to receive the deduction.
Bonus Depreciation for Businesses
Also included in the business incentives is a 50% first-year bonus depreciation of the adjusted basis of qualifying property. To be eligible, the property must be eligible property (as specifically defined) with a depreciation period of 20 years or less, water utility property, off-the-shelf computer software, or qualified leasehold property. The property must be placed in service after December 31, 2007, and before January 1, 2009.
Increased Luxury Auto Depreciation Limits
The Act increases the maximum first-year depreciation allowance for luxury autos to $11,060 (previously $3,060) for new passenger autos acquired and placed in service in 2008 if used entirely for business.
If you would like more information on this legislation, please contact the experts listed below at (800) 270-9629.
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