The new Economic Stimulus Act of 2008—signed by the President on February 13—is designed to spur spending. Of course, the main focus of the new law is the one-time rebates for individuals. But there is more to this new legislation than first meets the eye.
Let’s take a closer look at the main tax components of the new economic package.
Tax rebates: Most single filers will receive a one-time rebate of $600. This rebate amount is doubled to $1,200 for joint filers. If you have children under age 17, you may qualify for a rebate of $300 per child. There is no set limit on the number of rebates for children.
However, the rebates for both single and joint filers gradually phase out above certain thresholds. The phase-out begins at an adjusted gross income (AGI) of $75,000 for single filers and $150,000 for joint filers.
In addition, other individuals who do not pay income tax but have at least $3,000 in taxable income, generally are entitled to a $300 rebate. These rebates are doubled to $600 for qualified joint filers. The eligible beneficiaries may include Social Security recipients and disabled veterans (or surviving spouses of disabled veterans).
Section 179 deductions: In a temporary measure, the new law increases the Section 179 “expensing deduction” for assets placed in service in 2008. The maximum inflation-indexed amount of $128,000 jumps all the way up to $250,000 this year.
Furthermore, the dollar threshold for reducing the maximum Section 179 deduction for 2008 increases from $510,000 to $800,000. (The deduction is reduced dollar-for-dollar for amounts above the threshold.)
Bonus depreciation deductions: A qualified business may be able to claim a 50% bonus depreciation deduction for assets placed in service in 2008. This bonus deduction comes right off the top. The remaining balance is still available for regular depreciation deductions under the Modified Accelerated Cost Recovery System (MACRS).
Remember that this only a brief overview of the new tax law. Obtain more detailed information pertaining to your situation.
