House Approves Permanent $500k Cap On Section 179 Deduction
Written by Ken Gaebler
House of Representatives passes proposal to make temporary tax break on the expensing of equipment permanent, Senate and White House approvals unlikely.
For most small business owners, Section 179 tax deductions are an appealing part of the IRS tax code. Under Section 179, small businesses are able to write off a specific amount of equipment purchases in a single year, rather than depreciating the cost of those purchases over a multi-year timeframe.
Until 2008, the IRS set the annual cap on Section 179 expenses at $125k. As part of the economic stimulus package, Congress raised the cap, enabling small businesses to deduct a significantly higher portion of qualifying purchases in the year the equipment is acquired.
The increased Section 179 limit was gradually raised to $500k through a series of stimulus packages that were designed to put more money into the economy and incentivize small business owners to expand their operations.
Last year, legislation to make the increased Section 179 cap permanent failed to garner enough votes to pass the House. As of January 1, 2014, the cap fell from $500k to a mere $25k for each tax year.
But recently, the House of Representatives passed HR 4457, America's Small Business Tax Relief Act of 2014--legislation that raised the cap back up to $500k and made it a permanent part of the U.S. tax code, retroactive to January 1st.
However, Forbes and other media outlets have reported that the legislation has little chance of ever becoming law, with both the White House and the Senate poised to oppose its passage. The rationale behind opposition to the bill is that it would be too costly, forcing legislators to cut expenditures in other areas--cuts that could spell trouble for legislators in an election year.
Instead, it is believed that the Senate will modify the bill and approve another two-year extension of the increased Section 179 cap, setting the stage for yet another showdown farther down the road.
Have Friends Who Might Like This Article?
Share this on Twitter
Let them know on LinkedIn
Ready to Learn More? We Think You Might Like These Articles:
About Our Business News for Entrepreneurs
Our small business writers give you breaking news that focuses on entrepreneurship. Our coverage is dedicated to helping you to start and grow your business.