Senate Passes Small Business Tax Bill

The Senate passed a small business tax bill September 16, 2010 which includes several small business tax incentives. The House is expected to vote and pass the Senate bill in the very near future and President Obama indicated he will sign the bill. A few of the significant items are:

• Double of the Code Section 179 expensing amount to $500,000 for 2010 and 2011. Important to note, after 2011, the expensing limitation is scheduled to revert back to the anemic $25,000 limit.
• 50% bonus depreciation on qualifying assets is reinstated.
• Self-employeds can deduct their medical premiums on Schedule C for 2010.

Don't expect passage of other tax items, such as fixing the federal estate tax, extension of the Bush cuts, and the AMT patch, before the November elections.

TAX RATES FOR 2010 AND 2011

Several clients have asked if the tax rates for 2010 are going up. Currently the Bush tax cuts are in effect until the end of the year and tax rates are not expected to change through 2010. In 2011, the Bush tax cuts are set to expire back to higher rates a decade ago. An average married filing joint filer will pay approximately $2,000 more in tax.

According to our resource subscriptions, there is a talk of extending the Bush tax cuts on incomes less than $250,000. We'll keep you posted.