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Keep producing ‘manufacturing deductions’

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. What are the chances that the manufacturing deduction will be extended? L.C., Cleveland

A. Good news: Unlike certain other tax law provisions providing incentives to small businesses, like the Section 179 and bonus depreciation, the “manufacturing deduction” available under Section 199 hasn’t been modified, not has it expired or is it scheduled to expire. The deduction continues to be equal to the lesser of 9% of income from a qualified domestic production activity or taxable income from the year. It is further limited to 50% of the Form W-2 wages allocable to qualified domestic production activities.

Tip: This tax break can potentially cover activities beyond traditional manufacturing. See your tax pro.

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