The recently enacted economic stimulus package, signed into law by President Bush , will provide tax relief for purchases of defined fixed assets. H.R. 5140, the Economic Stimulus Act of 2008, provides increased limits for expensing fixed assets as well as additional “bonus” depreciation.

For taxable years beginning in 2008, the maximum amount allowed to be expensed under Section 179 is increased to $250,000 (prior to the legislation, the amount was $128,000.) The asset addition limit eligible for this deduction is increased to $800,000 ($510,000 prior to the legislation) and is phased out totally for asset additions over $1,050,000.

In addition to the increased Section 179 deduction, a taxpayer can take a 50% bonus depreciation deduction on any remaining depreciable basis. This is applicable for assets acquired and placed in service during calendar year 2008.

Note that this stimulus package relates to federal taxes only; state tax benefits will vary by state.

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Note: This summary is provided solely for informational purposes and is not intended to constitute professional advice. Consult your own tax advisor for advice on how this stimulus plan affects your company’s situation. Your individual tax situation will likely vary.

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