Posted by Kristin Oberlander - The National Association for the Self-Employed (NASE) applauds the Senate in their passage today of the Small Business Jobs and Credit Act of 2010 (H.R. 5297). In an era where the self-employed and micro-businesses (fewer than 10 employees) have grown faster than any business type, yet receive the least recognition and support from the federal government, this bill is a key first step in providing tax and access to capital relief for America’s smallest businesses.
A key victory and top legislative priority for the NASE for the past decade, is the inclusion of a one-year deduction for sole proprietors on health care costs for payroll tax purposes on their 2010 tax returns. Currently, the self-employed pay an additional 15.3% (self-employment) tax on their health insurance premium costs since they are unable to deduct those costs as a business expense. No other business entity pays additional taxes of this nature.
”Self-employed Americans have finally received some bottom-line relief in this difficult economic climate with the passage of the Small Business Jobs and Credit Act,” remarked Kristie Arslan, executive director of the NASE. “We hope that this legislation symbolizes that lawmakers are starting to pay attention to the needs of the self-employed, which represent 78% of all small businesses in the U.S.”
Other key provisions in the bill that will assist the self-employed include:
- A temporary increase in the maximum deduction for business start-up expenditures in 2010 and 2011 from $5,000 to $10,000, subject to a $60K threshold
- Extends the Sec. 179 expensing provision that allows small businesses to immediately expense up to $500,000 (up from $250,000) for tangible personal property and up to $250,000 for improvements to leasehold property and retail property
- Creation of a $30 billion Small Business Lending Fund to encourage small local banks and credit unions to increase loans to small businesses
The bill will now head back to the House of Representatives for a final vote and is expected to be signed into law within the next week.
Despite excitement over H.R. 5297’s movement through the Senate today, the NASE hopes to see Congress address the increased Form 1099 reporting requirement passed under the health care law prior to the end of this legislative session, as well as the extension of the individual income tax rates.