In February 2008, Congress enacted the Economic Stimulus Package of 2008 (HR 5140 - Pub. L. No. 110-185, 122 Stat). This legislation is designed to make increased spending by business more attractive for the 2008 tax year. This legislation provides companies with incentives to purchase assets such as software, and improve their business. By understanding the full benefits provided by the passage of this act, and taking full advantage of them in 2008, companies can reduce the cost of qualifying property by purchasing it and placing it in service in 2008.

The key components of this legislation that focus on business include an increase in the 21 U.S.C. §179 (“Section 179”) maximum deduction, an increase in the maximum amount of qualifying property that can be placed into service during the 2008 tax year, a bonus depreciation, and an increase in the “Luxury” auto depreciation.

The “Bonus” provisions of the Act are only applicable to assets purchased and placed in the 2008 calendar year, while the Section179 deductions are applicable to the 2008 tax year – companies that have tax years that do not match the calendar year can only take advantage of both of these tax incentives at the same time during the portion of their 2008 tax year that falls within 2008.

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