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IMPACT ON SMALL BUSINESS

Updated: February 4, 2013 2:50PM



Here’s a look at the deal’s inpact on small businesses, according to CCH, a Riverwoods-based tax, accounting and audit information company:

◆ Tax rates go up for some. High-income entrepreneurs with so-called pass-through income, who are not taxed at the corporate level but rather as individuals, will see higher rates due to provisions that increase tax rates for families with incomes above $450,000 and individuals above $400,000 to 39.6 percent from 35 percent.

◆ R&D tax credit. The research and development tax credit is extended through 2013 and made retroactive for 2012 providing tax breaks of between 14 and 20 percent for certain R&D expenses.

◆ Work Opportunity Tax Credit. It extends through 2013 a credit for employers that hire individuals from disadvantaged groups, including disabled veterans, welfare recipients, ex-offenders and others. Generally the credit is equal to 40 percent of the first year of wages up to $6,000.

◆ Section 179 equipment deduction. Extends a tax provision allowing companies to immediately take deductions on purchases of capital equipment rather than depreciate them over a period of time. The maximum deduction for 2012 and 2013 is $500,000, and the asset limit is $2 million. Also, 50 percent of what is spent for capital equipment can be expensed in the first year.

◆ Energy companies. Extends through 2013 a tax credit for facilities that produce energy from wind facilities.

◆ Empowerment zones. Extends through 2013 tax incentives for empowerment zones.

Francine Knowles



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