Some businesses, but not all, may benefit from increased consumer spending due to the U.S. economic stimulus checks that will start rolling out in May. Although many analysts expect consumers to use their stimulus checks to pay down their exceedingly high debt, that doesn’t mean small businesses won’t benefit. There are actually two parts of the legislation that pertain to businesses (per the N.Y. Times):
- It gives businesses a 50 percent “bonus” deduction on new equipment that would normally be depreciated over many years.
- It increases — to $250,000 from $128,000 in 2008 — the limit on expenses that small businesses can deduct from annual income, with a total cap of $800,000.
The America.gov website says:
For businesses, the law encourages investment in new equipment in 2008 by increasing the federal tax deductions available for those purchases. “This will encourage businesses to create new jobs now because buying equipment, software, and tangible property this year will dramatically lower their taxes,” according to a White House fact sheet.
If the downturn can create negative ripples across the economic pond, maybe the stimulus splash can also create positive ripples through the economy, by lowering businesses’ taxes, stimulating hiring and — who knows — increasing revenue. If you can, take advantage of it this year.