Signed into law at the end of last year, the Protecting Americans From Tax Hikes (PATH) Act strengthened and made permanent a bunch of temporary tax credits and deductions for small business that had been difficult to use or downright confusing in previous years.
Some examples:
- Section 179 write-offs that apply to most any sort of equipment or software were made permanent, ending years of uncertainty. Businesses can write off up to $500,000.
- Also extended: The research and development tax credit–sounds like it’s just for high tech companies, but isn’t. A bakery that develops a new jelly doughnut could count ingredients and labor costs for the credit. Congress also expanded the credit to cover some startups with no tax liability (they can apply it to the Social Security portion of payroll taxes).
For the details, see a roundup (registration may be required) from the New York Times and the Small Business Tax Guide (registration required) from the National Federation of Independent Business (NFIB). And consult your accountant.
