12/12/2006
Congress passes tax-relief extensions on its way home
Before adjourning for the year, the 109th Congress passed a legislation package this weekend that contained several pro–small-business provisions, including tax relief and postal reform.
The legislation, passed early Saturday morning, extended or restored $38 billion in tax relief to small business, including many provisions supported by NFIB.
"The items in this final legislation of the 109th Congress add up to substantial savings to many small companies across the country," said Dan Danner, NFIB executive vice president. "They will make a direct impact on the bottom line."
The following are the highlights of the 109th Congress' final legislation:
Taxes
Small-business owners face a mountain of taxes each year. The recently passed legislation will help ease this burden by:
- Preserving the state and local sales tax deduction through 2007
- Extending the research and development tax credit through 2007
- Continuing the 15-year depreciation period for leasehold improvements through 2007
- Extending the 15-year depreciation period for existing restaurant improvements through 2007
Health savings accounts
With the cost of providing health care consistently ranking as the No. 1 concern of small-business owners, NFIB has fought to improve the options available. The following enhancements to health savings accounts were included in this weekend's legislation:
- Money from flexible spending accounts and health reimbursement accounts can be rolled over into health savings accounts
- The annual plan deductible limitation on HSA contributions was repealed, which means that in 2007, individuals will be able to contribute $2,850 to an HSA and families will be able to deduct up to $5,650, regardless of the size of their health-insurance deductible
- Employers allowed to contribute prorated amounts into HSAs for recently hired employees
- One-time rollovers from IRAs into HSAs permitted
Energy
Rising fuel prices hit small businesses particularly hard, because they often absorb these cost increases instead of passing them on to their customers. Unlike their larger competitors, small businesses often have few capital reserves to handle such increases. Under the new legislation, 8.3 million acres in the Gulf of Mexico will be made available to offshore oil and natural gas exploration. Increasing the supply of domestic oil and natural gas will provide relief from future high energy prices.
Postal reform
The legislation's provisions for postal reform will bring stability and certainty to first-class mailing rates by prohibiting the post office from raising rates above that of inflation. Like energy and health-care prices, postal increases often make a direct impact on a small company's bottom line. Small business has been concerned about the rising mailing costs and feared first-class rates would soon be out of control.
