The new Economic Stimulus package will do little to turn around our current economy. However, many individuals will welcome the additional handout from "Uncle Sam". The $150 billion stimulus package focused on three areas: Families, Business, and Borrowers.

Benefits to the Family

Consumers reporting 2007 earned income of at least $3,000 with adjusted gross income of less than $150,000 (joint couples) and $75,000 (single) will see rebate checks of at ranging from $300 to $1,200, plus child rebates. The checks will be issued even if the individual reports no tax liability. Individuals will also receive another $300 rebate per child. The 2008 recovery rebate credit will be payable in the form of an advance rebate check based on 2007 return numbers. Individuals missing out on the 2008 credit, can have a second chance to qualify in for the credit in 2009 when they file their 2008 tax return.

Benefits to the Business

For capital expenditures made after January 1, 2008 and before January 1 2009, businesses will see an increase in the ability to write off the cost of new equipment and software. The package allows 50% depreciation on new equipment that is put into service during the year rather than the 20% maximum. An additional 50% first year depreciation will also be allowed on software. This tax provision effectively doubles the benefits of an existing write off for small businesses. The bonus depreciation is not limited to taxpayer income or the amount of capital expenditure during the year.

For tax years beginning in 2008, the Section 179 Deduction is also increased for business with capital expenditures of $800,000 or less. Business will be permitted to deduct up to $250,000 of purchases in 2008 and depreciate the balance over the life of the asset (5 years for computers, 3 years for eligible software). The Section 179 deduction begins to phase out as capital expenditures exceed $800,000 and is completely phased out when qualifying purchases exceed $1,050,000.

Luxury auto depreciate limits have also been raised from $3,060 and allow an additional $8,000 bonus depreciation. Therefore, total first year depreciation on a luxury auto is now $11,060 ($11,250 for vans or trucks).

Benefits to Borrowers

The plan allows Fannie Mae and Freddie Mac, for one year, to buy loans of up to $729,750. The current limit is $417,000. The plan would also increase the $362,790 limit on loans insured by the Federal Housing Administration and make it easier for borrowers to qualify. The net effect of the easing of credit is expected to have little impact on California where the median existing home price is about $490,000.