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The 2009 Economic Stimulus Package

By Trucktruth.com, June 1st, 2009

The 2009 Economic Stimulus Package – What’s in it for Business?

Although it is too soon to know whether the $789 billion American Recovery and Reinvestment Act (ARRA) of 2009 will stimulate the U.S. economy to the extent hoped, the $51 billion in temporary tax cuts for business that are included in the package do offer tangible short-term benefits for companies making capital expenditures this year.

The tax cuts include a one-year, 50 percent bonus depreciation on capital expenditures. After applying the bonus depreciation to a new machinery purchase, business owner can then apply the standard first-year depreciation on the remaining property basis. For a company in a seven-year asset depreciation class, for example, a new machine costing $100,000 would be entitled to a total 2009 depreciation of $57,000 ($50,000 bonus depreciation, plus $7,000 standard depreciation).

The stimulus package also includes a provision that increases the Section 179 deduction from $128,000 to $250,000 for companies whose total 2009 equipment purchases don’t exceed $800,000. Combined with the 50% bonus depreciation and 14% standard depreciation, it would result in a $335,500 deduction on a $400,000 new equipment purchase in 2009.

Another of the ARRA’s tax provisions makes companies potentially eligible for tax refunds by extending the carryback period for an operating loss incurred in 2008 from two years to five years.

In addition to the temporary federal tax cuts for business, the ARRA also includes tax relief for individuals, expansion of unemployment benefits, social welfare provisions, and spending on education, energy, infrastructure, scientific research, and health care.

Visit TruckTruth often for periodic updates on the ARRA’s impact on business and the economy. In the meantime, you can find additional information at www.recovery.gov.