SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Family Security and Small Business 
Stimulus Act of 2008''.

SEC. 2. INDIVIDUAL INCOME TAX RATE REDUCTION AFTER 2007.

    (a) Rate Reduction.--
            (1) In general.--Subparagraph (A) of section 1(i)(1) of the 
        Internal Revenue Code of 1986 (relating to tax imposed on 
        individuals) is amended to read as follows:
                    ``(A) In general.--In the case of taxable years 
                beginning after December 31, 2007--
                            ``(i) the rate of tax under subsections 
                        (a), (b), (c), and (d) on taxable income not 
                        over the initial bracket amount shall be 5 
                        percent, and
                            ``(ii) the 15 percent rate of tax shall 
                        apply only to taxable income over the initial 
                        bracket amount but not over the maximum dollar 
                        amount for the 15-percent rate bracket.''.
            (2) Conforming amendments.--
                    (A) The heading for paragraph (1) of section 1(i) 
                of such Code is amended by striking ``10-percent'' and 
                inserting ``5-percent''.
                    (B) Subparagraph (D) of section 1(i)(1) of such 
                Code is amended to read as follows:
            ``(D) Coordination with acceleration of 5 percent rate 
        bracket benefit for 2008.--This paragraph shall not apply to 
        any taxable year to which section 6428 applies.''.
            (3) 5-percent bracket made permanment.--Title IX of the 
        Economic Growth and Tax Relief Reconciliation Act of 2001 shall 
        not apply to paragraph (1) of section 1(i) of the Internal 
        Revenue Code of 1986, as amended by this subsection.
    (b) Advance Payment of 5 Percent Rate Bracket.--Section 6428 of 
such Code is amended to read as follows:

``SEC. 6428. ACCELERATION OF 5 PERCENT INCOME TAX RATE BRACKET BENEFIT 
              FOR 2008.

    ``(a) In General.--In the case of an eligible individual, there 
shall be allowed as a credit against the tax imposed by chapter 1 for 
the taxpayer's first taxable year beginning in 2008 an amount equal to 
5 percent of so much of the taxpayer's taxable income as does not 
exceed the initial bracket amount (as defined in section 1(i)(1)(B)).
    ``(b) Credit Treated as Nonrefundable Personal Credit.--For 
purposes of this title, the credit allowed under this section shall be 
treated as a credit allowable under subpart A of part IV of subchapter 
A of chapter 1.
    ``(c) Eligible Individual.--For purposes of this section, the term 
`eligible individual' means any individual other than--
            ``(1) any estate or trust,
            ``(2) any nonresident alien individual, and
            ``(3) any individual with respect to whom a deduction under 
        section 151 is allowable to another taxpayer for a taxable year 
        beginning in the calendar year in which the individual's 
        taxable year begins.
    ``(d) Coordination With Advance Refunds of Credit.--
            ``(1) In general.--The amount of credit which would (but 
        for this paragraph) be allowable under this section shall be 
        reduced (but not below zero) by the aggregate refunds and 
        credits made or allowed to the taxpayer under subsection (e). 
        Any failure to so reduce the credit shall be treated as arising 
        out of a mathematical or clerical error and assessed according 
        to section 6213(b)(1).
            ``(2) Joint returns.--In the case of a refund or credit 
        made or allowed under subsection (e) with respect to a joint 
        return, half of such refund or credit shall be treated as 
        having been made or allowed to each individual filing such 
        return.
    ``(e) Advance Refunds of Credit Based on Prior Year Data.--
            ``(1) In general.--Each individual who was an eligible 
        individual for such individual's first taxable year beginning 
        in 2006 shall be treated as having made a payment against the 
        tax imposed by chapter 1 for such first taxable year in an 
        amount equal to the advance refund amount for such taxable 
        year.
            ``(2) Advance refund amount.--For purposes of paragraph 
        (1), the advance refund amount is the amount that would have 
        been allowed as a credit under this section for such first 
        taxable year if--
                    ``(A) this section (other than subsections (b) and 
                (d) and this subsection) had applied to such taxable 
                year, and
                    ``(B) the credit for such taxable year were not 
                allowed to exceed the excess (if any) of--
                            ``(i) the sum of the regular tax liability 
                        (as defined in section 26(b)) plus the tax 
                        imposed by section 55, over
                            ``(ii) the sum of the credits allowable 
                        under part IV of subchapter A of chapter 1 
                        (other than the credits allowable under subpart 
                        C thereof, relating to refundable credits).
            ``(3) Timing of payments.--In the case of any overpayment 
        attributable to this subsection, the Secretary shall, subject 
        to the provisions of this title, refund or credit such 
        overpayment as rapidly as possible and, to the extent 
        practicable, before the date which is 30 days after the date of 
        the enactment of this section. No refund or credit shall be 
        made or allowed under this subsection after December 31, 2008.
            ``(4) No interest.--No interest shall be allowed on any 
        overpayment attributable to this subsection.''.
    (c) Technical Amendment.--The item relating to section 6428 in the 
table of sections for subchapter B of chapter 65 of such Code is 
amended to read as follows:

``Sec. 6428. Acceleration of 5 percent income tax rate bracket benefit 
                            for 2008.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 3. INCREASE IN EXPENSING FOR SMALL BUSINESSES.

    (a) $125,000 Limit Made Permanent; Temporary Increase to 
$375,000.--Paragraph (1) of section 179(b) of the Internal Revenue Code 
of 1986 (relating to election to expense certain depreciable business 
assets) is amended by striking ``$25,000 ($125,000 in the case of 
taxable years beginning after 2006 and before 2011)'' and inserting 
``$125,000 ($375,000 in the case of taxable years beginning after 2007 
and before 2010)''.
    (b) Conforming Amendment.--Subparagraph (A) of section 179(b)(5) of 
such Code is amended--
            (1) by striking ``and before 2011'', and
            (2) by adding at the end the following flush sentence:
                ``The preceding sentence shall not apply to the 
                $500,000 amount for taxable years beginning after 
                December 31, 2010.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.
Family Security and Small Business Stimulus Act of 2008 - Amends the Internal Revenue Code to: (1) allow a reduced 5% income tax rate on taxable income for low-income taxpayers; (2) allow an advance refund in 2008 for the reduction in the tax rate; and (3) increase to $375,000 between 2008 and 2010 the expensing allowance for small business depreciable assets.
To amend the Internal Revenue Code of 1986 to reduce individual income taxes by creating a new 5 percent rate of tax and to increase section 179 expensing for small businesses.