How Can Your Business Benefit from The
Economic Stimulus Act of 2008?
The Economic Stimulus Act of 2008 may make your tax return preparation a little more complex, but there can be real
benefits to your business. Briefly, the Act increases the depreciation cost that can be expensed for the tax year 2008 to
$250,000, up from $128,000. This includes ‘off-the-shelf’ computer software. Additionally, the phase -out limit for qualifying
equipment purchases is now to $800,000, up from $510,000. This means that purchases above the new $800,000 limit
reduce the $250,000 write-off on a dollar-per-dollar basis.
50% Bonus Depreciation
Accelerated depreciation deductions may be claimed under the Act. Any qualified property that is placed into service on or
after January 1, 2008 can claim additional first-year 50% bonus depreciation. Bonus depreciation can be used for most
property (other than certain intangible assets) including computer software, cars, and other property with a life of 20 years or
less. First-year expensing cannot be used to claim a loss, it is only used to offset business income for the year, and the rest
can be carried over.
MACRS Depreciation Deduction
Taken after Section 179 and the 50% first-year bonus, a 20% depreciation deduction may be taken in the first year
equipment is in service under MACRS (assuming a 5-year life, 200% declining balance).
In the savings example below, your Total Tax Year Deduction in Year 1 is the sum of Section 179, 50% Bonus
Depreciation, plus the 20% MACRS First Year Depreciation based on the qualifying equipment you’ve put in place for your
The resulting First Year Tax Savings and After Tax Cost is highlighted.
Sample Savings *
Equipment cost: $415,000.00
Deduction under Section 179 1 $250,000.00
Bonus Depreciation 50% 2 $82,500.00
Asset Life 5 years
Your Tax Bracket 35%
1st year MACRS depreciation 3 $16,500.00
Total 1st year tax deduction $349,000.00
First Year Tax Savings $122,150.00
After Tax Cost: $292,850.00
For more information call
Global Imaging, Inc.
Disclaimer: The above is an example for discussion purposes only and does not constitute tax or legal
advice. You should consult your accountant or tax advisor regarding the application to you and your
business of the tax provisions discussed above. FMV Leases are not eligible for this deduction.