The House of Representatives in February approved with a 272-142 vote permanent extension of higher expensing levels for Section 179, a provision that allows small businesses to write off capital purchases immediately. The measure was passed out of House Committee last week. The bill now moves to the Senate.
The measure makes higher Section 179 expensing levels experienced through the 2010-2014 tax years permanent. This would allow small business owners to deduct up to $500,000 in qualifying expenses with a phase-out threshold of $2 million. A 50% bonus depreciation for the purchase of new capital assets and equipment also is included in the measure. If the Senate does not agree to the House’s extension option or a variant thereof, the deduction level will remain standing for the 2015 tax year at $25,000. Last year, lawmakers in December debated extending higher expensing levels under the measure, arriving at a one-year extension for the 2014 tax year. That left businesses little time to make purchases before the Dec. 31 deadline for tax year 2014. The House’s latest approval, however, faces an uncertain future in the Senate, where a shorter extension period was favored last year. Full tax reform in lieu of extenders may also be considered.