Recovery Act 101

Tax relief

While the measures mentioned above are intended to open up credit channels for businesses to borrow money, there is also a number of changes to tax structures that will allow businesses to reduce their tax liabilities.

One of the primary benefits to businesses is the extension of the bonus depreciation allowance that had ended in 2008. With this additional depreciation allowance, businesses making a qualified capital investment can write off 50 percent of the investment (plus the normal percentage on the remaining amount) in the first year. The extension makes this applicable to equipment placed in service by the end of 2009. This provision benefits both equipment suppliers and those companies purchasing the assets (see sidebar p. 22).