What is the manufacturing tax deduction?
A part of the American Jobs Creation Act of 2004, this new deduction begins in 2005 and impacts many U.S. businesses. Starting at three percent of the manufacturer’s taxable manufacturing income, this deduction increases to nine percent by 2010. Service providers do not qualify for the deduction, including businesses selling food and beverages. If you are making or fabricating a product, you generally qualify for the deduction. This even includes businesses producing power, construction companies, engineering and architectural firms, and businesses handling, storing or processing agricultural products. The IRS admits the new deduction is complicated to understand. We can discuss with you the applicability of this new deduction to your business.
