FACT SHEET FOR SMALL BUSINESSES; 16 Tax Cuts Signed Into Law
Written by Post Public Information Representative, Oct 29, 2010, 0 Comments
Courtesy Lesley Lopez,WASHINGTON- Small businesses are the engine of our economy, creating nearly two-thirds of the new jobs over the last 15 years. The current recession has hit American small businesses especially hard – with most of the job losses at the end last year at the smallest firms. A new analysis finds smaller firms lost a crushing twenty-percent market share during the last decade (1997–2007), while large public firm gross revenues grew 16%. [U.S. Women’s Chamber of Commerce analysis of U.S. Census data, 9/27/10]
That is why Congress has put small business at the forefront as we have worked to move our economy in new direction. The 111th Congress has given America’s 27 million small businesses 16 tax cuts in the last two years and improved access to credit.
- Enacted the landmark Small Business Jobs Act:
- creating 500,000 jobs
- providing 8 tax cuts for small businesses, totaling $12 billion, to spur investment, growth, access to capital, new starts and hiring
- unleashing up to $300 billion in private sector lending for small businesses.
- Provided another 8 tax cuts for small businesses, totaling $75 billion — including a payroll tax holiday to spur hiring and tax cuts to help up to 4 million small businesses afford health insurance coverage for their employees.
- Expanded access to and lowered costs for SBA loans — supporting nearly $30 billion in lending to over 70,000 small businesses.
“Landmark” Small Business Jobs Act
In September, Congress passed and the President signed into law the Small Business Jobs Act – “a landmark piece of legislation that will empower small businesses across the country,” according to the National Small Business Association.
It is backed by a wide range of business groups, from the Small Business Majority and U.S. Chamber of Commerce to the National Retail Federation, National Restaurant Association, Business & Professional Women’s Foundation, International Franchise Association, and the Motor & Equipment Manufacturers.
The bill immediately extends successful SBA Recovery Act provisions, meaning that it is restarting the SBA’s Recovery lending, beginning with the more than1,300 small businesses that have been waiting to get the credit they need – with thousands more benefitting in the coming weeks.
And the bill includes eight new small business tax cuts – all effective now and applying to small businesses’ taxes for this year – providing an immediate incentive for businesses to make new investments and expand.
As the President of the National Small Business Association said, “It doesn’t matter what aspect of small business you are in, this bill has something for you.” For example:
- if you are a small business and you buy new equipment, you can immediately write off the first $500,000 of your investments;
- if you are one of over one million eligible small businesses, key long-term investments in your company will be subject to zero capital gains taxes;
- if you are an entrepreneur and take a chance on a new idea, you can deduct the first $10,000 of your start-up costs;
- and if you are self employed you can deduct 100 percent of the cost of health insurance for you and your family from your self-employment taxes.
EIGHT TAX CUTS YOU SHOULD KNOW ABOUT IN THE SMALL BUSINESS JOBS ACT
- Zero Taxes on Capital Gains from Key Small Business Investments: Under the Recovery Act, 75 percent of capital gains on key small business investments this year were excluded from taxes. The Small Business Jobs Act temporarily puts in place for the rest of 2010 a provision called for by the President – elimination of all capital gains taxes on these investments if held for five years. Over one million small businesses are eligible to receive investments this year that, if held for five years or longer, could be completely excluded from any capital gains taxation.
- Extension and Expansion of Small Businesses’ Ability to Immediately Expense Capital Investments: The bill increases to $500,000 for 2010 and 2011 the amount of investments that businesses would be eligible to immediately write off, while raising the level of investments at which the write-off phases out to $2 million. Prior to the passage of the bill, the expensing limit would have been $250,000 this year, and only $25,000 next year. The bill also expands purchases qualifying for expensing to include certain types of real property, such as leasehold, retail and restaurant improvements. This provision means that 4.5 million small businesses and individuals will be able to make new business investments today and know that they will earn a larger break on their taxes for this year.
- Extension of 50% Bonus Depreciation: The bill extends – as the President proposed in his budget – a Recovery Act provision for 50 percent “bonus depreciation” through 2010, providing 2 million businesses, large and small, with the ability to make new investments today and know they can receive a tax cut for this year by accelerating the rate at which they deduct capital expenditures.
- A New Deduction of Health Insurance Costs for Self-Employed: The bill allows 2 million self-employed to know that on their taxes for this year, they can get a deduction for the cost of health insurance for themselves and their family members in calculating their self-employment taxes. This provision is estimated to provide over $1.9 billion in tax cuts for these entrepreneurs.
- Tax Relief and Simplification for Cell Phone Deductions: The bill changes rules so that the use of cell phones can be deducted without burdensome extra documentation – making it easier for virtually every small business in America to receive deductions that they are entitled to, beginning on their taxes for this year.
