Tax Relief Act of 2010: Incentives for Businesses to Invest in Machinery and Equipment

The Tax Relief Act contains a trove of tax breaks for businesses.  The bill OKs the following major new incentives for businesses to invest in machinery and equipment:

1. A 100% bonus first-year depreciation allowance for property acquired and placed in service after Sept. 8, 2010, and before Jan. 1, 2012;

2. A 50% bonus first-year depreciation allowance for property placed in service after Dec. 31, 2011 and before Jan. 1, 2013;

3. Extension through Dec. 31, 2012, of the election to accelerate the AMT credit instead of claiming additional first year depreciation; and

4. For tax years beginning after Dec. 31, 2011, setting the maximum expensing amount under Sec. 179 at $125,000 and the investment-based phaseout amount at $500,000 (under current law, the expensing figures drop from $500,000/$2 million for 2010 and 2011 to $25,000/$200,000 after 2011).

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