The House and Senate recently passed President Bush’s Jobs and Growth Tax Relief Reconciliation Act of 2003, which includes depreciation relief, small business expensing, and other provisions that will relieve tax burdens for construction firms, owners, and employees.
The depreciation relief provision helps members of the electrical industry by allowing all firms buying new equipment before Jan. 1, 2005 to immediately deduct 50% of the cost, an increase from the 30% bonus depreciation enacted last year. The first-year limit for business automobiles has also increased from $4,600 to $7,650.
Small businesses that buy less than $400,000 worth of equipment in 2003 can expense $100,000 of it before using the bonus depreciation amounts. These limits increase from $200,000 and $25,000, respectively, in previous years and will be indexed for inflation in 2004 and 2005.
Another provision that will aide the electrical industry is the change in tax rates for dividends and capital gains. Corporate stockholders can benefit from the reduction in the top rate on both dividends and capital gains to 15% beginning in 2003.
According to industry economists, the legislation will stimulate a demand for construction by returning $210 billion to individuals, businesses, and states over the next 16 months.
Bush’s latest tax cut is now the third largest in U.S. history.