For your 2008 tax year, you may be able to expense up to $250,000 for property. This almost doubles the previous limit of $128,000, but is only available for your 2008 tax year!

Property that often qualifies includes: machinery, refrigerators, grocery store counters, office equipment, printing presses, computers, off-the-shelf computer software, signs, gasoline storage tanks and pumps at retail service stations, a single purpose agricultural or horticultural structure, and livestock (horses, cattle, hogs, sheep, goats, and other furbearing animals). Most passenger automobiles and other property used for transportation are also eligible for limited 179 deductions. Also, the section 179 deduction for the cost of any sport utility vehicle with a gross vehicle weight of over 6,000 pounds and not more than 14,000 pounds is limited to $25,000.

For example, if your tax year begins July 1, 2008, you can expense any qualifying property purchased, and placed and kept in service during your July 1, 2008, to June 30, 2009, tax year, up to $250,000. Land, buildings, and land improvements, such as swimming pools and paved parking areas at retail stores, are not eligible. Please note that there is a taxable income limitation on 179 expenses. You cannot expense an item used in a business more than the taxable income from that business.

Second, write it off faster with two deductions and save on your taxes.

First Deduction: For property acquired, placed and kept in service in calendar year 2008, you may be able to write-off 50% of what you paid for it (a special depreciation allowance).

Second Deduction: In addition to the 50% write-off, you can take a write-off of the normal first year depreciation on the remaining 50% of what you paid for the property.

Examples of eligible property include: off-the-shelf computer software, qualified leasehold improvement property, and tangible property with a recovery period of 20 years or less (which includes cell phones, tractor units for over-the-road use, computers, computer peripheral equipment, office furniture and fixtures, and farm buildings).

For passenger automobiles, vans and trucks depreciation limits are increased by $8,000 as follows:

Depreciation limits for passenger automobiles go from $2,960 to $10,960.

Depreciation limits for vans and trucks (with a gross vehicle weight of 6,000 pounds or less) go from $3,160 to $11,160.

The original use of the property must begin with the taxpayer after December 31, 2007. In other words, the property must be “new” property.

For example, if you acquire, and place and keep in service property during the current calendar year that costs $350,000, you can deduct 50 percent of its cost, or $175,000, in 2008 as a special depreciation deduction. In addition, you can use the remaining $175,000 to figure your regular depreciation deduction.

IRS Raiser Per-Mile Tax Deduction

In response to soaring gas prices, the IRS announced that it will raise the standard mileage rate that taxpayers use to deduct business miles to 58.5 cents a mile, an increase of 8 cents.

Ordinarily, the IRS sets the standard mileage rate in the fall for the next calendar year. But given the surge in gas prices, the IRS decided to make a midyear adjustment to better reflect the cost of operating a vehicle. The average price of a gallon of gas was $4.72 in mid June, an increase of nearly 37% from a year ago.

The new rate will apply to miles driven from July 1 through Dec 31 this year. Taxpayers will have to use the old rate to deduct miles driven during the first six months of the year.