Small Business Expensing Limit Returns to $25,000 After 2010 Unless Congress Acts
NFIB has long fought to increase the small business expensing limit, which recently was as low as $25,000 in the year of purchase. In February, President Bush signed the Economic Stimulus for the American People Act of 2008, which doubled the 2008 small business expensing limit from $125,000 to $250,000. This bill provides small business owners who invest less than $800,000 in their business this year with an immediate tax deduction for the entire cost of certain investments and business expenses, such as purchasing new equipment.
The 2007 War Supplemental bill (HR 2206), which was signed by the president May 25, 2007, contains a small business tax package that extends the expensing provision through the end of 2010. The bill increases the expensing limit to $125,000 and the phaseout threshold for this tax deduction to $500,000, both indexed to inflation.
However, the expensing-limit increase will expire and return to its previous level of $25,000 after 2010 unless Congress passes additional legislation to make this provision permanent! A majority of NFIB members exceed the $25,000 mark in just three months. NFIB will continue its fight for Congress to pass a permanent solution to the small business expensing problem. This will allow small firms to plan for the future and expense additional investments, therefore enabling those businesses to expand and create new jobs. This will also lower the cost of capital for tangible property and eliminate depreciation record-keeping requirements. In addition, this change will increase small business owners' ability to compete in today's technology-dependent markets.
