The fiscal cliff deal has finally been reached, and though the collection of spending cuts and tax hikes mainly affects individual and household incomes, Congress has not forgotten about small businesses. Small businesses were the real winners in the fiscal cliff deal. NerdWallet analyzes the deal, bringing you a comprehensive list of how your small business has benefited from the agreement.
Tax incentives that were extended in the fiscal cliff deal
| Tax incentive | What it means | Who is eligible |
|---|---|---|
| Research and experimentation tax credit | R&D tax credit is extended | All companies |
| Work opportunity tax credit | Companies can claim tax credits for employing disadvantaged people | All companies |
| Section 179 expenses | Companies can expense investments up to $500,000 instead of just $139,000 | Companies with total expenditures under $2 million per year |
| Temporary exclusion of gain on small business stock | Through 2013, there will be no capital gains tax on small business stock | Small businesses |
| Bonus depreciation | Companies can write off up to 50% of investments in their first year of business | New businesses |
| Depreciation for improving property | Improvements can be written off over a 15 year period rather than a 39 year period | All companies |
| Charitable deduction for food donations | Facilitates tax deductions for charitable donations | All companies |
| Charitable deductions for S corporations | Food donations can be deducted for up to double the previous amount | S corporations |
| Built-in tax gains | Companies converting to an S corporation must retain their assets for 5 years (instead of 10) or pay a capital gains tax | S corporations |
Small business owner image from Shutterstock
