Ohio's piece of the pie: how the recovery act affects you: when President Obama signed the American Recovery and Reinvestment Tax Act of 2009 (the Act), he ensured more than $300 billion worth of net tax cuts for businesses and individuals across the country. Locally, the Act will direct more than $8 billion to Ohio.

AuthorHartstein, Steven C.
PositionCover story

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Here are the more important tax cuts for businesses and individuals that the Act provides, along with the overall impact on Ohio's economy.

ECONOMIC BENEFITS FOR OHIO

While it may take years to fully understand the economic impact of the Act on Ohio's economy, there are some specific considerations for the state. According to U.S. Senator Sherrod Brown (D-Ohio) the Economic Recovery Act will:

* Create or save 133,000 jobs in Ohio. Over 90% of these jobs are in the private sector.

* Invest $282.9 million in funds for water and sewer projects, $935.7 million in highway funds, and $179.8 million in investments in mass transit in Ohio.

* Provide tax relief to an estimated 4.5 million Ohioans in the form of up to $400 for individuals and $800 for married couples through the Making Work Pay Tax Credit, which is described below.

* Prevent 884,000 Ohioans from paying the Alternative Minimum Tax (AMT).

* Reduce the burden on local tax-payers by putting more than $1.5 billion in funds that invest in local school districts and public colleges and universities and making Ohio one of the largest beneficiaries of education and training funds in the economic recovery legislation.

* Target communities hard-hit by job loss by providing $68 million in funds to retrain dislocated workers and help communities with high unemployment rates build "regional clusters" of industry and workforce.

* Help Ohio meet budget challenges by directing $3 billion in Medicaid funds, freeing up funds that currently consume more than one-third of Ohio's state budget.

* Direct $97.9 million in funds for Ohio's State Energy Program and $273.3 million to help Ohioans weatherize their homes, which is also geared toward creating jobs.

* Meet human needs and protect important services with $825.3 million in funds that support Ohio's food banks, school lunches, and other vital nutrition programs.

BUSINESS TAX CUTS

The bulk of the business tax cuts included in the Act extend tax provisions that were due to expire. Businesses looking to purchase qualifying new property, equipment or vehicles in 2009 stand to benefit the most from provisions such as the bonus depreciation described below.

FIRST YEAR EXPENSING

The benefit of Section 179 is that it allows a business to deduct the full purchase price (up to $250,000) of qualifying equipment that was purchased or financed during the tax year. The Act extends the Section 179 expensing limit of $250,000 and the threshold for reducing the deduction of $800,000 for property placed in service in 2009.

BONUS DEPRECIATION

The following example describes how Section 179, in conjunction with bonus depreciation, can greatly benefit a business planning to place new equipment in service...

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