New Tax Credits and Deductions For Small Businesses

New tax credits and deductions

Photo Credit: Philip Taylor (PT Money)

First, the good news: according to the Small Business Administration (SBA), the majority of small business in the United States shouldn’t see their income taxes increase this year. Now here’s even better news: the American Tax Payer Relief Act of 2012 has deductions that not only benefit individuals but businesses as well.

For example, Section 179 deductions (these are deductions made on certain types of property, making them an expense) were retroactively raised back to their $500,000 levels of 2010. The increase is through 2012 and 2013, so any small business that made improvements in equipment and software last year or will do so this year may qualify.

Another example comes from the Small Business Jobs Act. The act, signed into law in 2010, lowers the tax rate on capitals gains to zero percent. This special tax rate applies to certain small business stocks and its applicable as long as the stock is held for a minimum of five years.

Over at the Washington Post, Deborah Sweeney writes in greater depth about these tax changes and deductions.