To amend the Internal Revenue Code of 1986 to provide for small business tax incentives, to amend the Fair Labor Standards Act of 1938 to increase the minimum wage and to increase the exemption for annual gross volume of sales made or business done by an enterprise, and for other purposes.

Summary: Amends the Internal Revenue Code to make permanent the increased expensing allowance ($100,000) for depreciable business property. Increases to $500,000 the income threshold for reducing the expensing allowance and makes such threshold amount permanent. Provides for an inflation adjustment to the allowance and the threshold.

Allows a credit against alternative minimum tax liability for the work opportunity tax credit, the welfare to work tax credit, and the tax credit for increasing research activities.

Provides for a minimum standard tax deduction of $2,500 for expenses for the business use of a home.

Amends the Fair Labor Standards Act of 1938 to: (1) increase the minimum wage for tipped employees to $3.25 beginning on October 1, 2005; (2) exempt from minimum wage requirements employers with less than ten employees; (3) phase in an increase of the minimum wage to $6.50 beginning October 1, 2007; and (4) phase in an increase in the gross volume of sales amount applicable to the small business exemption from minimum wage requirements.

Amends title XVI (Supplemental Security Income) of the Social Security Act to exclude from income determinations under the supplemental security income programs minimum wage income that exceeds certain earned income.

SECTION 1. 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 2006)'' 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 2006)'' 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 2004, 
                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 2005, 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 2004' 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, 2004.
    (b) Work Opportunity Credit, Welfare-To-Work Credit, and Research 
Credit Allowed Against Alternative Minimum Tax.--
            (1) In general.--Subsection (c) of section 38 of the 
        Internal Revenue Code of 1986 (relating to limitation based on 
        amount of tax) is amended by redesignating paragraph (4) as 
        paragraph (7) and by inserting after paragraph (3) the 
        following new paragraphs:
            ``(4) Special rules for work opportunity credit.--
                    ``(A) In general.--In the case of the work 
                opportunity credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to such credit, 
                        and
                            ``(ii) in applying paragraph (1) to such 
                        credit--
                                    ``(I) subparagraph (A) shall not 
                                apply, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the work 
                                opportunity credit, the welfare-to-work 
                                credit, or the research credit).
                    ``(B) Work opportunity credit.--For purposes of 
                this subsection, the term `work opportunity credit' 
                means the credit allowable under subsection (a) by 
                reason of section 51(a).
            ``(5) Special rules for welfare-to-work credit.--
                    ``(A) In general.--In the case of the welfare-to-
                work credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to such credit, 
                        and
                            ``(ii) in applying paragraph (1) to such 
                        credit--
                                    ``(I) subparagraph (A) shall not 
                                apply, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the welfare-
                                to-work credit or the research credit).
                    ``(B) Welfare-to-work credit.--For purposes of this 
                subsection, the term `welfare-to-work credit' means the 
                credit allowable under subsection (a) by reason of 
                section 51A(d)(2).
            ``(6) Special rules for research credit.--
                    ``(A) In general.--In the case of the research 
                credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to such credit, 
                        and
                            ``(ii) in applying paragraph (1) to such 
                        credit--
                                    ``(I) subparagraph (A) shall not 
                                apply, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the research 
                                credit).
                    ``(B) Research credit.--For purposes of this 
                subsection, the term `research credit' means the credit 
                allowable under subsection (a) by reason of section 
                41.''.
            (2) Conforming amendments.--
                    (A) Subclause (II) of section 38(c)(2)(A)(ii) of 
                such Code is amended--
                            (i) by striking ``or'' after ``employment 
                        credit'' and inserting a comma, and
                            (ii) by inserting ``, the work opportunity 
                        credit, the welfare-to-work credit, or the 
                        research credit'' after ``employee credit''.
                    (B) Subclause (II) of section 38(c)(3)(A)(ii) of 
                such Code is amended by inserting ``, the work 
                opportunity credit, the welfare-to-work, or the 
                research credit'' after ``employee credit''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 2004.

SEC. 2. 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.--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, the 
        deductions allowed under this chapter for the taxable year by 
        reason of being attributed to such use shall not be less than 
        $2,500.''.
    (b) Standard Home Office Deduction not Subject to Limitation.--
Paragraph (5) of section 280A(c) of such Code (relating to limitation 
on deductions) is amended by striking ``In the case of'' and inserting 
``Except as provided in paragraph (7), in the case of''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 3. MINIMUM WAGE PROVISIONS.

    (a) Increase in Tip Income.--Section 3(m)(1) of the Fair Labor 
Standards Act of 1938 (29 U.S.C. 203(m)(1)) is amended by adding before 
the semicolon the following: ``, except that, for purposes of this 
paragraph, the cash wage paid such employee shall be not less than 
$3.25 an hour beginning October 1, 2005''.
    (b) Minimum Wage.--
            (1) Exemption for small employers.--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) 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, 
        2005, not less than $5.50 an hour during the year beginning 
        October 1, 2005, not less than $6.00 an hour during the year 
        beginning October 1, 2006, and not less than $6.50 an hour 
        during the year beginning October 1, 2007.''.
    (c) Effective Date.--The amendment made by subsection (b)(1) shall 
apply beginning October 1, 2005.

SEC. 4. 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 annual gross volume 
                of sales made or business done, exclusive of excise 
                taxes at the retail level that are separately stated, 
                is not less than $500,000 through the period ending 
                September 30, 2005, not less than $650,000 during the 
                year beginning October 1, 2005, not less than $800,000 
                during the year beginning October 1, 2006, and not less 
                than $1,000,000 during the year beginning October 1, 
                2007.''.

SEC. 5. 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, 2005, and shall apply to benefits for months 
beginning on or after such date.