The $789 billion compromise stimulus package agreed to on February 11 contains few direct breaks for small businesses.
The few of note:
- A five-year net operating loss carryback for companies with annual revenue under $5 million for losses arising in 2008 and 2009.
- Extension of the $250,000 first-year expensing limit and 50% bonus depreciation for certain equipment purchases for 2009.
- A one-year “patch” to the alternative minimum tax for 2009 by means of higher exemption amounts (most small business owners pay tax on business income on their personal returns, so AMT can be an issue for them).
While details of the law are still missing, the package does not appear to create any significant direct incentives for starting businesses and hiring employees, two key ways to get the economy back on track.
Some experts have suggested that Congress create incentives for these purposes, such as doubling the write-off for start-up costs from $5,000 to $10,000 and giving tax credits for expanding payroll. Others want the expensing and bonus depreciation provisions to be extended at least through 2010, since most businesses are not in a position to make capital investments at the present time, even with these tax incentives.