07.26.07
Small Business Tax Law Changes
Uncle Sam likes to keep you on your toes. If you are a small business owner and think you’ve just figured out your taxes for 2006, get ready to bone up on a few tax law changes that could potentially impact your biz when filing tax year 2007.
Self-Employment Tax Contribution Base Increased. The maximum amount of self-employment income subject to Social Security taxes increases to $97,500 in 2007, up from $94,200 in 2006. The self-employment tax rate remains 15.3 percent.
Social Security Tax Contribution Base Increased. The maximum amount of wages subject to Social Security tax increases to $97,500 in 2007, up from $94,200 in 2006. The tax rate remains 7.65 percent on employers and employees.
Business Standard Mileage Rate Rises. The standard business mileage rate increases to 48.5 cents per mile for miles driven in 2007 for business, up from 44.5 cents per mile in 2006. Remember that you can deduct the cost of parking and tolls in addition to the mileage allowance.
Tax-free Parking for Employees. Starting in 2007, firms can pay for $215 a month of parking tax free for employees, up $10 per month from 2006. The cap on tax-free transit passes rises to $110 a month, up $5 a month from 2006.
Increased Section 179 Expense Deduction. The maximum amount of equipment placed in service in 2007 that businesses can expense increases to $112,000, a $4,000 increase from 2006. The annual investment limit increases to $450,000 for 2007, up from $430,000 the year before. Thus, you won’t lose the benefit of expensing until you place more than $450,000 of assets in service in 2007.
(Source: TurboTax)
