New Tax Changes: Business

This is a summary of the business provisions of the Stimulus Bill signed into law today by President Obama. See the preceding post for Personal/Individual provisions.

Bonus Depreciation: First year 50% bonus depreciation has been extended through 2009.

Section 179 Expensing: Increased the amount of first year depreciation expensing up to $250,000. Note that a business must be profitable to utilize this provision.

Change in Estimated Taxes: While we will need further clarification, “qualified individuals” (defined as those who have adjusted gross income of less than $500,000 and more than 50% of their income comes from a business with less than 500 employees) can make 2009 estimated tax payments of only 90% of their prior year (2008) liability, rather than 100% of the liability. We are not sure yet how this will interact with the general rule that requires estimated taxes of 110% of the prior year tax for individuals with AGI of greater than $150,000.

There are other, very specific or targeted provisions. The above items should be the ones affecting most businesses.

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