The U.S. House of Representatives on June 12 passed a pair of bills that would make two tax breaks for small businesses permanent, including the expiring section 179 expensing provision.
The House voted 272-144 in favor of H.R. 4457, “America's Small Business Tax Relief Act of 2014,” which would permanently extend Section 179 expensing of up to $500,000.
The House also passed a second bill, 263-155, to ease the tax burden on firms that convert from taxable corporate status to small-business status. H.R. 4453, the “S Corporation Permanent Tax Relief Act of 2014,” makes permanent the shortening of the built-in gains tax-holding period for S corporations from 10 years to five years. It also makes it easier for small businesses to deduct charitable contributions.
NATSO on June 9 joined more than 150 associations representing small business owners from every industry sector in expressing support for America’s Small Business Tax Relief Act of 2014.
Since 2003, Congress has steadily increased the amount of investment that small businesses can expense from $25,000 to $500,000. However, these expensing limits were temporary, and in 2014 they reverted to $25,000. For small business owners, these ad-hoc changes created uncertainty that prevented long-term planning.
Introduced by Congressman Pat Tiberi (R-Ohio) and Ron Kind (D-Wisc.), H.R. 4457 would allow small business owners to maximize investment in their companies during years when they have positive cash-flow and provide an incentive for small business owners to reinvest in their business. This is particularly important for small businesses, which are more sensitive than larger firms to problems related to cash flow and more reliant on earnings to finance new investment.
Despite the House vote, the bills still await action in the Senate. The Obama Administration has said that it opposes making both tax provisions permanent.
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