Economic Stimulus Plan Provides Bonus Depreciation for 2008

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Economic Stimulus Plan Provides Bonus Depreciation for 2008

The year is off to a promising start with good news from Washington on the economic stimulus package. Among other things (such as the tax rebates for individuals), the final plan provides for accelerated depreciation for semiconductor and other equipment.

The “bonus” depreciation provision allows for 50 percent depreciation of goods placed into service in 2008. The provision provides a financial incentive for customers to make purchases this year since tax law generally allows for depreciation of semiconductor equipment over five years. This provision is similar to the one approved in 2002 which expired a few years ago. The Senate had considered a provision allowing for 25 percent depreciation in 2008 and 25 percent in 2009. SEMI pushed for the more favorable House version and we are pleased that it prevailed in the final negotiations.

The final stimulus package was recently approved after a great deal of debate about what should be included. While much of the discussion in the media was focused on the tax rebates, active negotiations took place regarding measures intended to stimulate business activity. Since there were limits on how much this package could include, some other priorities such as the expiring renewable energy tax credits as well as the expired R&D tax credit did not make it into the final bill. The business community is pushing for these credits in separate legislation and the credits could possibly be included in a second round of stimulus measures which may be considered in the coming months.

SEMI supports the enactment of bonus depreciation and extension of the tax credits and pushed for these in meetings with congressional offices. We also joined several other high-tech trade associations on a letter to congressional leadership and the White House urging them to consider a range of innovation policies that would contribute to enhanced productivity and economic growth. In part, the letter states, “If we are to jumpstart our economy and get it back on the road to recovery, we will need more than a new battery and another tank of gas. We will need a new engine, and the best way to do that is by unleashing the American spirit of innovation and creativity.”

Click here for details on the Economic Stimulus Act of 2008 (H.R. 5140):

February 13, 2008