OUTLINE OF 2004 TAX CHANGES

Sales Tax Deduction

Expense Limit for SUVs

Expiration of Bonus Depreciation 

Business Standard Mileage Deduction

Meal Expense When Subject to "Hours of Service" Limits

Section 179 Expensing

I. Sales Tax Deduction

Taxpayers who itemize deductions will be able to claim a state and local tax deduction for sales taxes on their 2004 and 2005 returns.  Taxpayers may either maintain receipts showing sales tax or utilize IRS tables in determining the deduction amount.  Sales tax paid on motor vehicles and boats may be added to the IRS table amount.  The IRS is scheduled to release the Sales Tax Tables in January 2005.

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II. Expense Limit for SUVs 

Under the American Jobs Creation Act of 2004, the deduction for certain sport utility vehicles placed in service after October 22, 2004 is limited to no more than $25,000.  (The previous limit was $100,000). 

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III. Expiration of Bonus Depreciation

The additional first-year depreciation deduction (30% or 50% Bonus Deduction) on the adjusted basis of qualified property is generally available for property placed in service before January 1, 2005.  In other words, the Taxpayer Bonus Depreciation expires at the end of 2004.

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IV. Business Standard Mileage Deduction

For 2004, the standard mileage rate for the cost of operating a car, van, pickup, or panel truck is 37.5¢ per mile

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V. Meal Expense When Subject to "Hours of Service" Limits

Generally, you can deduct only 50% of your business-related meal expenses while traveling away from home for business purposes.  However, you can deduct a higher percentage if the meals take place while you are subject to Department of Transportation "hours of service" limits.  For 2004, this limit is 70%.

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VI. Section 179 Expensing

The maximum amount that can be expensed under Section 179 is increased to $102,000 for property placed in service in 2004.  This amount will continue to be indexed for inflation after 2003.

The amount of property placed in service before Section 179 begins to phase out is increased from $400,000 to $410,000.

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