The Recovery Rebates and Economic Stimulus for the American People Act of 2008 delivers huge tax relief to manufacturing companies, spelled out by AMT—The Association For Manufacturing technology. First, businesses will receive a 50 percent bonus depreciation for new capital expenditures ordered and placed into service during 2008. Bonus depreciation allows businesses an extra one-year boost in how much they can deduct on capital expenditures that depreciate over time. For example, under the old law, according to AMT, a new $100,000 machine could provide a 2008 depreciation deduction of 14 percent, or $14,000. Now, says AMT, first-year depreciation climbs to $57,000—half of the purchase price plus the 14 percent regular depreciation on the remaining property basis.
The new law also more than doubles the amount that small businesses can write off for new or used equipment purchased during 2008, from $128,000 to $250,000. And, it significantly increases the amount that can be purchased during the year and still allow manufacturers to receive the full benefits of the Section 179 expensing option—from the previous cap of $510,000 to $800,000.