On Friday, Senator Chuck Grassley introduced the Small Business Tax Relief Act of 2009. It aims to cut taxes for small businesses. If enacted, the bill would spread tax benefits to small, but also to many large businesses. Here is a breakdown of the bill's main features.
The primary benefits the Small Business Tax Relief Act of 2009 would give businesses is decreased tax liability along with increased deductions. It both expands small business tax benefits offered, and increases the size of businesses eligible for many of them.
One element that would please many small businesses is the increased "Section 179" expensing. Section 179 expenses refer to the portion of the tax code that allows deductions for qualifying equipment purchased and put into service in a given tax year. The Obama administration's stimulus package increased the amount that can be expensed from $125,000 to $250,000. Currently, this deduction phases out for businesses that purchase more than $800,000 worth of such equipment.
Grassley's bill would increase the maximum Section 179 deduction to $500,000, and wouldn't phase out any deduction unless a business spent more than $2,000,000 on qualifying equipment in a given year.