Fiscal Cliff Tax Deal: What It Means for Small Businesses
On January 1, 2013, Congress passed the Taxpayer Relief Act of 2012, otherwise known as the "Fiscal Cliff Deal." In it were provisions that will affect, and for the most part benefit, small businesses in 2013. Among the most significant are the following:
Section 179 Expensing Limits Increased. The Schedule 179 limit for the amount of business equipment that can be deducted in one year was scheduled to go down to $25,000 in 2013. Under the new law, this amount was increased to $500,000 for 2012 and 2013.
50% Bonus Depreciation Extended. Bonus depreciation, which was scheduled to expire at the end of 2012, was extended through 2013. Bonus depreciation allows taxpayers to depreciate 50% of the adjusted basis of qualified property during the first year the property is placed in service.
Work Opportunity Credit. The new law extends for two years, through 2013, a provision that allows businesses to claim a work opportunity tax credit equal to 40% of the first $6,000 of wages paid to new hires in of one of eight targeted groups.
Employer-Provided Mass Transit Benefits. The new law extends through 2013 the increase in the monthly tax-free limt for employer-provided transit and vanpool benefits from $125 to $240.
Returning Heroes and Wounded Warriors Work Opportunity Tax Credits. The new law extends through the end of 2013 provisions that all businesses to claim a work opportunity tax credit for hiring qualified veterans.
For more information, see What Small Businesses Need to Know About the Fiscal Cliff Tax Deal.