A variety of tax bills have surfaced in Congress and many of them are of great interest to our industry. The first - in May, Congress passed and sent to the President a measure to extend the favorable capital gains and dividend tax rates. The measure extends, through 2010, the tax cuts passed in 2003 which reduced the tax rate on most dividends to 15% from as high as 38.6%, and the tax rate on most capital gains from 20% to 15%.
The other major provision extends and increases the exemption levels for the Alternative Minimum Tax (AMT). Even though the dividend and capital gains tax cuts are not set to expire until 2008, extending them now through 2010 is considered vital to preserve economic stability and maintain a robust investment climate.
Another provision of interest to our industry extends the Section 179 expensing for small businesses for two years - through 2009. Small businesses may deduct in the first year up to $100,000 of investments in depreciable assets. If Congress had done nothing, after 2007, the expensing limit would have declined to $25,000.