President Obama today signed a small business law that will help the self-employed and entrepreneurs. The law will allow individuals who are self-employed to deduct 100% of their family’s health care costs. It will also allow entrepreneurs to deduct $10,000 of initial start-up costs of a new venture.
The cost of paying for family health coverage out of pocket is a major expense for the self-employed, with costs often reaching hundreds if not thousands of dollars. Being able to deduct 100% of these costs from self-employment tax is a much welcomed benefit. This will provide an estimated $1.9 billion in tax relief for the 2 million self-employed in the United States.
This bill will also encourage those who have had a new idea but not acted on it. With the unemployment rate nearing 10%, the new bill will provide an incentive for entrepreneurs to invest in that idea. The first $10,000 spent on a start-up venture can now be deducted from taxes. This is a 100% increase from the $5,000 prior to the bill. This incentive is only for this year so individuals must take immediate action to capitalize on it.
The passing of the bill comes at a beneficial time for democrats as they head towards November elections.