Permanent Expensing Bill Introduced in the House

February 4, 2015

pic-tax-wordOn Feb. 2, House Ways and Means Committee members Reps. Pat Tiberi (R-Ohio) and Ron Kind (D-Wis.) reintroduced bipartisan legislation, entitled America’s Small Business Tax Relief Act, to permanently extend increased expensing outlined in Section 179 of the tax code for small businesses. More than one in three NSBA members takes advantage of this break as it helps alleviate two top concerns for small business owners: reducing tax complexity and improving cash flow.

Last week, House Majority Leader Kevin McCarthy (R-Calif.) circulated a memo indicating that business expensing was on a list of several tax bills expected to come up for a vote next week.

The Tiberi-Kind bill would make permanent the levels effective during the 2010-2014 tax years allowing taxpayers to expense up to $500,000 in investments in property, equipment, and computer software with the deduction phased out after investments exceed $2 million. These amounts would be adjusted for inflation. Unlike assets that are acquired for the production of income (such as investment property), Section 179 of the tax code gives an owner the option to deduct the costs of assets acquired for business use as expenses in the year they purchased the assets, instead of requiring them to be capitalized and depreciated.

The current Tiberi-Kind bill replicates measures that the House passed in 2014, first as a stand-alone bill with a vote of 272-144 and again as part of the larger jobs package, H.R. 4, the Jobs for America Act by a vote of 253-163. Unfortunately, neither bill was considered by the Senate and the expanded version expired for 2015, dropping the value of immediate write-offs to $25,000.

The current $25,000 threshold dramatically limits the number of firms that can benefit and reduces the economic effect of the provision which was intended to spread economic growth through incentivizing small firms to purchase equipment. NSBA has long supported expanding and making permanent Section 179 expensing as it is an immediate deduction, improves cash-flow and investment for small businesses.

NSBA encourages small-businesses owners to contact their representatives and urge them to support the Tiberi-Kind bill when it is considered on the House floor.