2008 Tax Changes
Posted by Rhonda Spaulding on September 22, 2008
The biggest impact change in 2008 is increased depreciation deductions. When you buy property that will be used for more than one year, the IRS requires you to depreciate that property over a predetermined number of years. However, small businesses qualify for the section 179 expense deduction. Section 179 allows taxpayers to deduct the full amount of the purchase in the first year, but it cannot be used to create a loss. The total amount of section 179 allowed in 2008 is increased to $250,000.
If you can’t take advantage of the section 179 deduction because of the business income limits, there is also bonus depreciation where you are allowed to deduct 50% of the total cost during 2008. This is similar to the bonus depreciation deduction enacted after September 11, 2001. So, if you are a business owner needing to buy property; 2008 may be the year to take advantage of these additional tax deductions.
Business mileage deduction amounts have increased to $.50.5/mile for obvious reasons.