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Key business & personal tax breaks extended

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in Hiring,Human Resources,Small Business Tax,Small Business Tax Deduction Strategies

In addition to the Roth IRA and kiddie-tax changes described above, here are other key provisions of the new tax law passed last month:

Favorable capital gains and dividend rates. The current maximum federal tax rate on long-term capital gains and qualified dividends is only 15 percent. That preferential tax treatment was scheduled to end after 2008, but the new law extends it through 2010.

Alternative minimum tax (AMT) relief. Millions of taxpayers were forced to pay extra taxes this year because they fell victim to lower AMT exemption rates. The new law pushes up the AMT exemption amounts—to $42,500 for unmarried filers and $62,550 for joint filers—which will help more Americans avoid the AMT for 2006.

Business equipment. The law extends two years, to the end of 2009, the Section 179 provision that allows small businesses to deduct up to $100,000 in expenses for equipment and other depreciable assets.

Note: Congress will likely take up a second tax bill soon—possibly attached to pension-reform legislation—that would address other expiring tax provisions, including the R&D tax credit, various hiring credits and the option of deducting state sales tax or income tax on your 1040.

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