Three types of tax incentives are now available to help small business, two incentives are for small business owners, and one incentive is for the population at large. Equipment expensing (originally Section 179 of the Bush stimulus bill in early 2008) has been extended through 2009 and the limit has been increased from $125,000 to $250,000. The deduction is phased out for businesses that spend more than $800,000 on capital expenditures for the year. Investment in vehicles, machinery, and computers is eligible for expensing.
Small business owners can also receive a tax credit for hiring someone who is the target group of traditionally disadvantaged workers, including an unemployed military veteran, a high-school dropout. The Work Opportunity Tax Credit allows an employer to claim a tax credit for 40% of the first $6,000 in wages to a qualifying worker. Two new classes of workers are now eligible: veterans who left the military within the past five years and “disconnected” youths (someone between 16 and 25 who hasn’t attended school or held a job within the past five months).
Finally, anyone who invests in small businesses, holds onto the investments for five years, and then sells at a profit can exclude 75% of the gain (within certain limits), but only for stocks purchased after the bill is enacted.
(From CNNMoney.com, “Stimulus: What’s in it for small biz?” by Stacy Cowley, February 26, 2009)
Photo courtesy of Herzogbr.
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