Two new bills winding through Congress would allow businesses to keep writing off up to 100 percent of equipment purchases up to $500,000 per year.
United States Reps. Pat Tiberi (R-Ohio) and Ron Kind (D-Wis.) introduced a bill in the House last week that would permanently set the Section 179 expensing limit at $500,000. The Section 179 limit was $500,000 from 2010 to 2013, but is slated to fall to $25,000 for 2014 unless Congress takes action to increase it.
"While small-business owners across the country take advantage of Section 179 small-business expensing, the fluctuating rules surrounding the measure make it difficult to budget and plan," Tiberi said in a press release. "[Ron] Kind and I believe that by making the rules permanent, small-business owners will have the stability and predictability they need to grow, expand and create new jobs.”
The Senate Finance Committee approved its own bill a couple weeks ago that would extend the $500,000 Section 179 expensing limit as well as 50-percent bonus depreciation rules and other tax breaks that were set to disappear in 2014 through 2015. The House and Senate bills, assuming they both pass, will have to be reconciled before full Congress can vote on them.
Experts, however, say there’s a good chance that the Section 179 expensing limit will be raised to $500,000 again—whether permanently or just for a couple years—because Congress is very focused on the tax code right now. The fact that extending the $500,000 expensing limit has bipartisan support is also a good sign.
Many business owners have been nervous about making large equipment purchases this year because of the Section 179 expensing limit being in limbo. Such rules are particularly valuable to small businesses like farms and construction firms that make big equipment purchases.
Bill French, owner of W.L. French Excavating in North Billerica, Massachusetts, stopped buying bulldozers and other equipment this year after realizing that the expensing limits had fallen so low, according to The Associated Press. He estimated that he saved $1 million on $2 million worth of equipment purchases in 2013 thanks to the high Section 179 expensing limit.
Now he’s waiting to see whether Congress will re-up the limit before he makes more purchases. "I'm just going to rebuild what I have," French told the AP. "It doesn't make sense to buy new equipment" right now.
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