The House of Representatives passed legislation, by a vote of 272-142, to permanently extend the ability of family farmers and small businesses to write off capital purchases immediately, instead of over time.
A permanent extension of Section 179 is a legislative priorities for 2015 of many agricultural organizations. The tax provision is widely used by farmers to buy tractors, farm implements, and other equipment. Last December, President Obama signed legislation extending the Section 179 tax credit, along with more than 50 other expired tax provisions, but for 2014 only. That action meant farmers could benefit from the expensing allowance only on the tax forms they are filling out for 2014.
“Dairy farming requires significant investments in machinery and equipment,” said Jim Mulhern, National Milk Producers Federation President and CEO. “By allowing producers to immediately write off these purchases, Section 179 gives producers an incentive to invest in their businesses while it reduced their record-keeping burden. This permanent extension provides much greater financial certainty in a year when dairy farmers will see much lower income levels.”
The “America’s Small Business Tax Relief Act Of 2015,” H.R. 636, would let taxpayers expense, for taxable years beginning after 2014, $500,000 of the cost of qualifying property placed in service for the taxable year. That amount would be reduced by the amount the cost of the property exceeds $2 million. Both amounts would be indexed for inflation after the 2015 tax year. A 50% bonus depreciation for the purchase of new capital assets, including farm equipment, is included.
“Failure to permanently restore Section 179 will add to the financial strains on family farmers who already find it difficult to pass on their farms to the next generation,” Mulhern said.
The bill now faces an uncertain future in the Senate, and a possible veto at the White House.