After months of turmoil resulting from a shift in industry preferences, a recent attempt to extend the Section 179 tax deduction has made another step toward success. This tax deduction allows taxpayers to deduct the cost of some types of business-related purchases, as compared to capitalizing and depreciating them.
Extension passes House of Representatives
At the end of 2013, the Section 179 tax deduction’s prowess for helping businesses was reduced by a large amount, and since then lawmakers have focused on restoring its abilities. Rental Pulse reported that the U.S. House of Representatives recently passed H.R. 4457, the American Small Business Tax Relief Act of 2014. This act would permanently extend the Section 179 deduction, which would restore it to its original values.
At the beginning of 2014, the law was changed so that businesses could only deduct about $25,000 per year. This bill, should it fully pass through the lawmaking bodies, is expected to restore applicable expenses to $500,000 annually on purchases or leases of qualified equipment of up to $2 million.
House representatives noted that enacting H.R. 4457 gives small businesses more of an opportunity to compete in the current market. Should it pass the Senate and become enacted, the bill will extend small businesses’ ability to improve their technology means by leaps and bounds.
More than 50 years of history
According to a recent statement made by Representative Dave Camp, a Republican representing Midland, Michigan, restoring the full power of Section 179 would drastically improve the tax burdens that numerous small businesses may face in the current market. Especially considering that Section 179 has been in place since the 1950s, the provisions made in the current market will provide high-quality extensions to operators.
Over time, it’s expected that the extension of this policy will help bolster the small business market fully, giving companies more funds that they can reinvest into their businesses, new employees and better equipment. Any move that can help bring more growth to the current small business market will likely pay off over time, with plenty of benefits inherent in this Section 179 extension should it be extended.
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