In an attempt to revitalize a slowing economy, President Bush signed into law on Feb 20th the Economic Stimulus Act of 2008. Thanks to this new set of policies, lower and middle income taxpayers stand to benefit from additional rebate checks and an easier time refinancing their mortgages.But taxpayers are not the only ones benefiting. The ESA temporarily reinstates a first-year depreciation deduction equal to 50 percent of the cost of the equipment. Qualifying equipment and other fixed assets must be purchased after Jan 1 2008, and put into use by Dec. 31, 2008. During this period, a business may claim an additional first-year 50% depreciation deduction on purchased assets plus the normal first year depreciation deduction (which is 20% for 5-year assets) on the remaining net cost. Another noteworthy change to the tax code involves a significant increase to the Section 179 expensing limits. Previously, the limit on equipment purchase deductions was $128,000, and the total cost of equipment purchased could not exceed $510,000. The Economic Stimulus Act of 2008 has almost doubled the deduction cap, to $250,000, and raised the total allowable cost of new equipment purchases to $800,000. Though experts disagree regarding the effect the Economic Stimulus Act of 2008 will actually have on the economy, one thing is clear: if you own a small business and are need of new or additional equipment, now is the time get it.

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