The Economic Stimulus of 2008

By Rich Pacella

The Economic Stimulus Act of 2008 (”Act”) provides major tax benefits for businesses. While the Act was initially more known for the tax rebates that individuals will receive to jump-start the U.S. economy, it also provides for major business tax incentives aimed to provide a shot in the arm to boost the slowing economy.

Prior to the new law, a business could expense the first $128,000 of the cost of qualifying property in 2008. The remaining amount of the qualified property must generally be depreciated over five years, seven years, or a longer period. This maximum Code Section 179 expense is allowed as long as a business purchases less than $510,000 of qualifying property. The Code Section 179 expense amount is reduced dollar for dollar by the cost of qualified property placed in service during the tax year in excess of $510,000, completely phasing out for a business that placed into service over $638,000 of qualifying property in 2008.

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