Starting in 2008
Self-Employment Tax Contribution Base Increased. The
maximum amount of self-employment income subject to
Social Security taxes increases to $102,000 in 2008, up
from $97,500 in 2007. The self-employment tax rate
remains 15.3 percent.
Social Security Tax Contribution Base Increased. The
maximum amount of wages subject to Social Security
tax increases to $102,000 in 2008, up from $97,500 in
2007. The tax rate remains 7.65 percent on employers
and employees.
Business Standard Mileage Rate Rises. The standard
business mileage rate increases to 50.5 cents per mile
for miles driven in 2008 for business, up from 48.5
cents per mile in 2006. Remember that you can deduct
the cost of parking and tolls in addition to the mileage
allowance.
Tax-free Parking for Employees. Starting in 2008, firms
can pay for $220 a month of parking tax free for
employees, up $5 per month from 2007. The cap on
tax-free transit passes rises to $115 a month, up $5 a
month from 2007.
Increased Section 179 Expense Deduction. The
maximum amount of equipment placed in service in
2007 that businesses can expense increases to
$128,000, a $3,000 increase from 2007. The annual
investment limit increases to $510,000 for 2008, up
from $500,000 the year before. Thus, you won't lose
the benefit of expensing until you place more than
$510,000 of assets in service in 2007.
The R&D Tax Credit. The credit for increasing
spending on research and development expired after
2007. We expect Congress to reinstate the popular tax
credit in 2008, retroactive to the beginning of the year.
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