As a part of the Economic Stimulus Act of 2008 that was signed into law on February 13 by President Bush, two provisions provide significant benefit to manufacturing companies.

The new law nearly doubles the amount of deductible Code Sec. 179 expensing for 2008 to $250,000, and increases the threshold for reducing the deduction to $800,000. It applies to property purchased and put into service in the tax year beginning in 2008. This would benefit small businesses that are purchasing equipment.

The Act also provides a temporary bonus depreciation aimed at encouraging business investment. Property must be eligible for the modified accelerated cost recovery system, with a depreciation of 20 years or less, and must be purchased and placed in service during 2008. The new law provides taxpayers a 50% first year bonus depreciation of the adjusted basis of the property.

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