Bonus Depreciation ExtendedJuly 14, 2014
The House of Representatives passed legislation to extend the bonus depreciation tax credit for businesses permanently on July 11, 2014, however, Senate leaders are saying they don’t expect any action in the Senate on the bills before the November midterm elections.
The measure, which passed 258-160, is the latest efforts to extend a string of temporary tax incentives indefinitely. House Ways and Means Committee proclaimed that permanently renewing the credit, which expired at the end of 2013 along with nearly 50 other breaks, would pave the way for tax reform. Under bonus depreciation, companies can generally write off 50 percent of capital purchases (including business aircraft) in the first year. Consideration of a package to renew more than 50 tax breaks has stalled in the Senate due to the ongoing disagreement over amendments.
The House, meanwhile, has also passed permanent extensions of the research and development credit, a provision known as Section 179, to allow small businesses to write off investments, and breaks to help corporations that do not pay income taxes and pass along income to shareholders. In the process, the tax breaks have become a part of both parties’ election-year messages. Bonus depreciation was among dozens of temporary tax breaks to expire at the end of 2013. Unlike the House, the Senate is seeking to extend almost all of those incentives on a two-year basis. Business groups say the bonus depreciation write-off gives companies more leeway to purchase new equipment, giving the economy a jolt in the process.