Increase the Small Business Expensing Limit

Date: February 25, 2014

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 January 1, 2014, 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.

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