In December 2014, the president signed H.R. 5771, which restored the small business expensing level to $500,000 for tax year 2014. Unfortunately, H.R. 5771 did not permanently restore the expensing limit. Therefore, at the beginning of 2015, the expensing limit reverted to $25,000. Unless Congress acts to increase the level back to $500,000, small business owners will be faced with a massive tax hike.
If Congress permanently increases business expensing, a new study by the NFIB Research Foundation projects there would be 197,000 more jobs and $18.6 billion in higher economic productivity. To view the study click here.
Business expensing (Section 179 in the tax code) allows small businesses to immediately deduct the full value of investments in equipment in the year that the investment is made, instead of depreciating the investments over time. This simplifies accounting and frees up cash to be reinvested in the business. There are limits, however, on the amount you can deduct in a year and on the types of property that qualify.
On Jan. 1 of this year, the increased expensing limits under the American Taxpayer Relief Act of 2012 expired. This caused the Section 179 expensing amount to drop to $25,000, without the ability to expense certain real property.
To help small businesses, higher limits and the inclusion of real property improvements should be made permanent. This will allow small businesses to plan for the future and expense additional investments, and therefore, enable those businesses to expand and create new jobs. NFIB urges Congress to take action and permanently extend the 2014 Section 179 expensing levels.
- Read NFIB's Key Vote letter to Congress in support of small business expensing.
- Read NFIB's letter in support of small business expensing for the 114th Congress.
- Read the Multi-Industry letter in support of small business expensing.
- Read NFIB's letter in support of H.R. 4457, the America's Small Business Tax Relief Act of 2014.
- Learn more about how you can take advantage of Section 179.
Small Business Expensing
- Download NFIB's Key Vote Letter for the 114th Congress
- Download NFIB's Infographic on Small Business Expensing
- Download the Multi-Industry Letter on Small Business Expensing