Bill to Permanently Increase Sect. 170 Levels Clears U.S. House

By a vote of 272-144, the U.S. House of Representatives passed America’s Small Business Tax Relief Act (H.R. 4457) to permanently increase Section 179 expensing levels.

H.R. 4457 would permanently increase the maximum amount and phase-out threshold to the levels in effect from 2010 through 2013 ($500,000 and $2 million respectively). Under current law, beginning in 2014, a taxpayer may immediately expense up to $25,000 of Sec. 179 property annually, with a dollar-for-dollar phase-out of the maximum deductible amount for purchases exceeding $200,000.

In addition, the proposal includes adjustments for inflation, repeals the exclusion of air-conditioning and heating units from qualified expenses, and eliminates the $250,000 limit on real property qualifying for expensing.

Our Association supports permanently increasing Sec. 179 expensing levels to promote growth and add certainty to the tax code and encourage capital investment, particularly by smaller companies. The Association also supports Congressional action to reinstate the temporary 50% depreciation bonus.

The legislation now goes to the Senate, where its future is unclear. In May, the upper chamber started debate on the Expiring Provisions Improvement Reform & Efficiency Act (EXPIRE Act), before the bill’s consideration was halted due to partisan bickering over amendments.

Known inside the beltway as “tax extenders,” the legislation continues for two years dozens of tax provisions that expired at the end of 2013. Specifically, the bill includes a two-year extension of 50% bonus depreciation for qualified property purchased and placed in service before Jan. 1, 2016. It also makes a conforming change to the percentage of completion rules for certain long-term contracts and increases Sec. 179 expensing to 2010-2013 levels.