Small business tax incentives

(a)

Increase in section 179 expensing

(1)

Increase in dollar limitation made permanent

Paragraph (1) of section 179(b) of the Internal Revenue Code of 1986 (relating to dollar limitation) is amended by striking $25,000 ($100,000 in the case of taxable years beginning after 2002 and before 2008) and inserting $100,000. (2)

Increase in threshold for reduction of dollar limitation

Paragraph (2) of section 179(b) of such Code (relating to reduction in limitation) is amended by striking $200,000 ($400,000 in the case of taxable years beginning after 2002 and before 2008) and inserting $500,000. (3)

Inflation adjustment

Paragraph (5) of section 179(b) of such Code (relating to inflations adjustments) is amended to read as follows:

(5)

Inflation adjustments

(A)

Dollar limitation

In the case of any taxable year beginning in a calendar year after 2005, the $100,000 amount in paragraph (1) shall be increased by an amount equal to— (i)such dollar amount, multiplied by (ii)the cost-of-living adjustment under section 1(f)(3) for the calendar year in which the taxable year begins determined by substituting calendar year 2002 for calendar year 1992 in subparagraph (B) thereof. (B)

Phaseout amount

In the case of any taxable year beginning in a calendar year after 2006, the $500,000 amount in paragraph (2) shall be increased by an amount equal to— (i)such dollar amount, multiplied by (ii)the cost-of-living adjustment under section 1(f)(3) for the calendar year in which the taxable year begins determined by substituting calendar year 2005 for calendar year 1992 in subparagraph (B) thereof. (C)

Rounding

(i)

Dollar limitation

If the amount in paragraph (1) as increased under subparagraph (A) is not a multiple of $1,000, such amount shall be rounded to the nearest multiple of $1,000. (ii)

Phaseout amount

If the amount in paragraph (2) as increased under subparagraph (B) is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of $10,000.

(4)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after December 31, 2005. (b)

Work opportunity credit, welfare-to-work credit, and research credit allowed against alternative minimum tax

(1)

In general

Subparagraph (B) of section 38(c)(4) of the Internal Revenue Code of 1986 is amended by striking the period at the end of clause (ii)(II) and inserting a comma and by adding at the end the following new clauses:

(iii)the credit determined under section 51, (iv)the credit determined under section 51A, and (v)the credit determined under section 41.

(2)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after December 31, 2005.

Standard home office deduction

(a)

In general

Subsection (c) of section 280A of the Internal Revenue Code of 1986 (relating to disallowance of certain expenses in connection with business use of home, rental of vacation homes, etc.) is amended by adding at the end the following new paragraph:

(7)

Standard home office deduction

If the taxpayer elects (at such time and in such form and manner as the Secretary may prescribe) to have this paragraph apply for any taxable year, in the case of a use described in paragraph (1), (2), or (4), and in the case of a use described in paragraph (3) where the dwelling unit is used by the taxpayer during the taxable year as a residence— (A)there shall be allowed as a deduction an amount equal to $2,500, and (B)no deduction otherwise allowable under this chapter shall be allowed with respect to such use.

(b)

Effective date

The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

Minimum wage provisions

(a)

Exemption for small employers

(1)

In general

Section 6 of the Fair Labor Standards Act of 1938 (29 U.S.C. 206) is amended— (A)in subsection (a), by inserting after Every employer the following: who employs ten or more employees; and (B)in subsection (b), by inserting after Every employer the following: who employs ten or more employees. (2)

Effective date

The amendments made by this subsection shall apply beginning October 1, 2006. (b)

Phased increase

Section 6(a) of such Act (29 U.S.C. 206(a)) is amended by striking paragraph (1) and inserting the following new paragraph:

(1)except as otherwise provided in this section, not less than $5.15 an hour through the period ending September 30, 2006, not less than $5.50 an hour during the year beginning October 1, 2006, not less than $6.00 an hour during the year beginning October 1, 2007, and not less than $6.50 an hour beginning October 1, 2008;

Increased exemption for annual gross volume of sales made or business done by an enterprise

Section 3(s)(1)(A)(ii) of the Fair Labor Standards Act of 1938 (29 U.S.C. 203(s)(1)(A)(ii)) is amended to read as follows:

(ii)is an enterprise whose gross volume of sales made or business done during the taxable year (exclusive of excise taxes at the retail level that are separately stated) is not less than $500,000 in the case of taxable years ending before October 1, 2006, not less than $650,000 in the case of taxable years ending during the year beginning October 1, 2006, not less than $800,000 in the case of taxable years ending during the year beginning October 1, 2007, and not less than $1,000,000 in the case of taxable years ending after September 30, 2008;

Earned income exclusion under the SSI program

(a)

In general

Section 1612(b) of the Social Security Act (42 U.S.C. 1382a(b)) is amended— (1)by striking and at the end of paragraph (22); (2)by striking the period at the end of paragraph (23) and inserting ; and; and (3)by adding at the end the following:

(24) (A)if such individual does not have an eligible spouse, the amount (if any) by which the minimum wage rate in effect for the month under section 6 of the Fair Labor Standards Act of 1938 multiplied by the number of hours for which such individual is gainfully employed during the month exceeds the total amount of earned income of such individual excluded by the preceding provisions of this subsection for the month; or (B)if such individual has an eligible spouse, the amount (if any) by which the minimum wage rate in effect for the month under section 6 of the Fair Labor Standards Act of 1938 multiplied by the total number of hours for which such individual and such spouse are gainfully employed during the month exceeds the total amount of earned income of such individual and such spouse excluded by the preceding provisions of this subsection for the month.

(b)

Effective date

The amendments made by subsection (a) shall take effect on October 1, 2006, and shall apply to benefits for months beginning on or after such date.