Stimulus deal: What's in it for small biz

U.S. House of Representatives Speaker Nancy Pelosi, House Republican Leader John Boehner and Treasury Secretary Henry Paulson unveiled a stimulus plan Thursday that, if approved, will bring tax breaks and rebates.

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(FORTUNE Small Business) -- Congress is expected to move swiftly on an economic stimulus package hammered out this week by House leaders and Treasury Secretary Henry Paulson. While individual tax rebates are the plan's centerpiece, Congressional leaders said the bill will include provisions aimed at spurring job creation and offering businesses tax incentives for equipment purchases.

The deal will double the amount small businesses can write off their taxes for new investments made in 2008, from $125,000 to $250,000. It also lifts the cap on businesses eligible for the deduction, expanding it to businesses making up to $800,000 (up from the current $500,000 limit).

Another provision will allow businesses investing in new plants and equipment to speed up bonus depreciation provisions, so that firms can write off 50 percent for investments in 2008.

The heart of the stimulus plan is rebates that will go to individuals who pay income tax. If the plan is passed as is, most single taxpayers will receive rebates of $600, and most two-income households will receive $1,200, plus an additional $300 per child.

However, high-income filers miss out: Individuals earning $75,000 or more and couples with income of $150,000 or higher will receive reduced rebates, with the payments phasing out entirely at incomes of around $87,000 for individuals and $174,000 for joint filers.

Congressional leaders estimate that a total of 117 million families will receive a check as part of the $140 billion stimulus measure.

The plan still has to make it through the Senate, where it may face opposition. Senate Finance Committee Chairman Max Baucus (D-Mont.) said Thursday that his committee will mark up its own economic stimulus package next week, independent of House legislation. Baucus's package could include extensions to unemployment insurance and food stamps, controversial measures the House omitted in its deal.

Senate Committee on Small Business and Entrepreneurship Chairman John Kerry (D-Mass.) is also readying his own stimulus bill including a mixture of tax relief and spending measures, which could be introduced as early as this evening, according to a Kerry aide. Details on how his bill would differ from the House's were not yet available.

House leaders praised their version of the package. The deal will "help the business community in a targeted way, a timely way and a temporary way," Pelosi (D-Calif.) said in a press conference this afternoon.

President Bush also endorsed the compromise plan.

"This package has the right set of policies and is the right size," he said. "The incentives in this package will lead to higher consumer spending and increased business investment this year."

In addition to tax relief, the package includes mortgage lending reforms: a one-year increase in Fannie Mae's and Freddie Mac's conforming loan limits, from $417,000 to a maximum of $729,750, and a permanent increase in the Federal Housing Administration loan limit from the current $367,000 up to a maximum of $729,750.