Did you know that Congress included a small business tax break with the minimum wage hike it passed last May?

Increased Section 179/small business expensing was first enacted in 2003 as part of President Bush's Jobs Creation Act. Under the old Sec. 179 rules, companies could expense up to $25,000 of their qualifying capital expenditures in a given tax year. In 2003, this amount was substantially increased to $100,000 for total purchases not exceeding $400,000.

This year, it got even better. Sec. 179 was enhanced and extended through 2011. Today, companies can expense up to $125,000 of capital equipment purchases as long as total equipment expenditures do not exceed $500,000 in the given tax year. That amount is more than double the old law’s limit and is indexed for inflation. The maximum annual expensing amount is reduced dollar-for-dollar by the amount of qualified expensing-eligible property in excess of the limit. Unfortunately, we revert back to the old law in 2011.

What does this mean to manufacturers of capital equipment? It means that many of your customers can write off more of their capital equipment purchases than ever before. This is an excellent incentive to modernize job shops and spur innovation. Don't forget to mention Sec. 179/small business expensing when meeting with your customers.