The same Economic Stimulus Act that’s going to be putting cash in your pocket this spring could save your business even more money on capital equipment purchases made before the end of the year. In addition to the much publicized individual tax refunds the government plans to start handing out in May, Congress’ Economic Stimulus Act provides businesses with two significant tax benefits on purchases made in 2008:
- a 50% depreciation allowance on 2008 purchases, and
- an increase in the expensing limit for tax years beginning in 2008.
Qualifying specifications may seem a bit complicated (this is the government, after all) and may limit your potential tax benefit, but most companies stand to gain. Click here to read the IRS’ explanation of the tax benefits provided to businesses under the 2008 Economic Stimulus Act.
“If you’re thinking about making a large expenditure, 2008 is a good year to do it,” CPA Michael Cecere of the Massachusetts accounting firm Gray, Gray & Gray told Modern Materials Handling.
The special 2008 tax package is expected to have a greater effect on smaller purchases than on major equipment investments which generally require months of planning. Because there is still ample time to identify solution-specific needs, industry experts expect to see an increase in small scale equipment purchases. The one-time tax incentives may also encourage companies to implement sidelined projects and crunch the timelines on existing projects to complete equipment purchases before the year-end deadline.