ASA's Washington, D.C., office highlights several key elements of the recent tax bill that are likely to have the greatest impact on you and the automotive service industry.
Businesses may expense $100,000 in new equipment purchases each year. This is an increase from the current $25,000 per year. This expires after 2005.
Businesses may take a 50 percent depreciation deduction for new equipment and additional capital investments. This is an increase from the current 30 percent.
This expires after 2004.
Tax rates 38.6 percent, 35 percent, 30 percent and 27 percent will decrease to 35 percent, 33 percent, 28 percent and 25 percent, respectively, beginning this year.
This expires after 2010.
Child Tax Credit
The child credit will be $1,000 through 2004. This expires after 2004, reverting to $700 per child.
Alternative Minimum Tax
Married couples filing jointly will be exempted from the AMT for income up to $58,000. This is a $9,000 increase from current law. Single filers would have an exemption for income up to $40,250. This expires after 2004.
Married couples filing jointly will have their standard deductions and the amount of income taxed at the 15 percent rate increased to two times that of a single filer. This expires after 2004.
The capital gains rate of 20 percent for the sale of those investments held at least one year will fall to 15 percent. This expires after 2008.
Dividends are presently taxed at the same rate as other income. Now dividends will be taxed at a rate of 15 percent for most investors. This expires after 2008.