Tax Law Changes for Businesses

Taxpayers should make sure that they are aware of important changes to the tax law before they complete their 2003 federal income tax forms. Some of these changes were part of the Jobs and Growth Tax Relief Reconciliation Act of 2003.

Here are the major changes that affect tax years beginning in 2003:

All Businesses, Including Self-Employed

  • The standard mileage rate for 2003 for business use of a vehicle is 36 cents per mile.
  • There is a special first-year depreciation allowance of 50% for qualified property acquired after May 5, 2003 (except for property acquired under a binding written contract in effect before May 6, 2003). Instead of claiming the 50% allowance, taxpayers may elect to claim the 30% allowance or elect not to claim any special allowance. The depreciation limit for vehicles subject to the 50% allowance is increased to $10,710 ($11,000 for trucks and vans).
  • The limit on the section 179 expense deduction is increased to $100,000 for qualified property ($135,000 for qualified zone property, qualified renewal property, or qualified New York Liberty Zone property). This limit is reduced by the amount by which the cost of section 179 property placed in service during the year exceeds $400,000. Also, the definition of section 179 property has been expanded to include off-the-shelf computer software.


  • Self-employed individuals may be able to deduct 100 percent of their health insurance expenses.
  • The self-employed must pay the Social Security part of self-employment taxes for maximum net self-employment earnings up to $87,000.

For more information, see IRS Publication 334, "Tax Guide for Small Business." It includes a listing of some tax changes for 2003 returns, plus explanations of the changes. It also includes some of the changes for 2004. Publication 553, "Highlights of 2003 Tax Changes," includes tax changes for businesses as well as for individuals.

You may obtain publications by downloading them from this Web site or by calling toll free 1-800-TAX-FORM (1-800-829-3676).

Related Items:

You may like these other stories...

IRS audits less than 1 percent of big partnershipsAccording to an April 17 report from the Government Accountability Office (GAO), the IRS audits fewer than 1 percent of large business partnerships, Stephen Ohlemacher of the...
Legislation coming out of Washington just might reduce homeowners' burden for disaster insurance. It's a topic very much on everyone's minds since the mudslide in Oso, Washington. The loss of human life was...
Divorce is hard, and the IRS isn't going to make it any easier. The IRS generally says "no" to tax deductions that might ease the pain of divorce. In certain circumstances, however, you might be able to salvage...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.