It wasn’t until yesterday that Margaritte Malfy realized that she’d be saving $16,000 as a result of the new economic stimulus package. Now the East Village restaurateur, who owns two La Palapa restaurants, is planning to invest much of her unexpected savings back into the renovation and expansion of her St. Mark’s Place branch.

“For a small business right now, a few thousand dollars extra is a big deal,” Ms. Malfy said. “It means more promotional money, more advertising, more employees, new repairs. Before, we thought we’d have to sacrifice a lot of that.”

With President Bush’s recent signing of the $168 billion stimulus package, New York City’s small businesses are expecting a windfall later this year, as two little-noticed provisions are expected to generate hundreds of thousands of dollars in savings.

The city is home to more than 200,000 small businesses, which account for about half of its private sector work-force and generate $4.5 billion in tax revenues. The stimulus package will help bolster those businesses by raising the limit on expenses that are deductible from a company’s income to $250,000 from $128,000 and giving the company a 50% bonus deduction on new equipment that is expected to depreciate over time. The latter provision means that a company will be able to deduct half of the total cost of a new purchase from its income this year, as well as the regular cost depreciation in the ensuing years.

While businesses large and small stand to benefit, the city’s smaller firms will likely feel the benefits most, the New York director of the National Federation of Independent Business, Michael Elmendorf, said.

“Most small businesses in New York run on relatively small margins,” a fact due in part to relatively high taxes, health care costs, and regulatory burdens, he said. “So when you give them that extra money, you’re creating a powerful incentive to grow or expand their business in a way that they couldn’t before.”

It is unclear how much money the city’s businesses will save under the provisions, since some companies may not take advantage of the deductions, while others are just beginning to factor the savings into their budgets. Supporters of the legislation do estimate, however, that new job growth will reach into the thousands, with a large share of new employment arising from small businesses that buy goods and services from other small businesses. “These companies are pre-eminent job creators,” Mr. Elmendorf said. “When they’re buying off each other, it’s creating more capital and jobs all around, which means you get a double hit.”

Some companies also are counting on increased business from consumers who will start receiving rebate checks in May under the stimulus plan.

“Once consumers pay off their credit card bills or make an extra payment, they’ll say, ‘Let’s relax, go out to dinner, see a movie,'” the chief of marketing for the New York office of the federal Small Business Administration, James Miller, said. “Somehow this money will float back.”

Still, most small companies are poised to benefit the most from the deduction provisions. For a company like the Pink Slip, a lingerie retailer that generates between $500,000 and $900,000 a year from a shop in Grand Central Terminal, the provisions will offer a vital boost at a time when its owner is trying to expand.

With the lease on her current 338-square-foot space set to expire next year, Margo Andros said the provisions will help pay the $5,000 to $8,000 associated with the accounting fees and bidding proposal expenses she expects to incur as she applies to renew her lease in one of the terminal’s larger spaces.

Ms. Andros also is counting on the tax deductions to bolster her retail business, which has remained profitable by netting larger sales this year, despite the downturn in consumer activity. “The sale is still there, but it is no longer easy,” she said. “Any kind of relief we can get from the stimulus, we’ll take.”