Editor's note: Get the latest Section 179 news - What You Need To Know About Section 179
The Election Day takeover of the Senate by the Republican Party might boost the morale of farmers and small business owners advocating for an extension of higher section 179 expensing levels, but the work likely will rest on the shoulders of the lame duck congress, the National Farmers Union suggested Wednesday.
The section 179 provision in previous tax years has allowed farm businesses to take the full depreciation deduction of an item that meets certain specifications – in many cases machinery – in the current tax year, with a maximum deduction of $500,000 and a phase-out threshold of $2 million.
That deduction level, however, has fallen to $25,000 with a $200,000 phase-out for 2014, and will remain that way unless Congress acts on tax reform or a "tax extenders" package before the end of the year.
Without higher expensing levels under section 179, farmers may be slower to make needed equipment purchases, which is why NFU President Roger Johnson on Wednesday said his organization is ready to make the case for an extension.
"NFU will strongly pursue the extension of expiring tax provisions for small business expensing, and renewable energy during the upcoming lame-duck session of congress,” Johnson said, also referencing renewable fuels extenders that made it into a package passed by the Senate Finance Committee in April.
“Family farmers and ranchers rely on these provisions that are critical to managing their business," he said.
The Senate package advocates for a two-year reinstatement of the $500,000 section 179 expensing level, and while it has been approved in Committee, it has not moved on for consideration by the full Senate.
The entire House, however, has addressed the section 179 issue, approving in June a package that included permanent restoration of section 179 to the $500,000 level.
Despite inaction in the Senate, Finance Committee Chairman Sen. Ron Wyden, D-Ore., who will lose his chairmanship in the 114th Congress, said action will be required before the end of year as business owners make tax decisions.
"Because Congress has not renewed increased expensing limits under section 179, industrious Oregon wine makers ... may be forced to choose between new equipment and hiring new employees," Wyden said in a September statement.
The House also has shown promise for more action on section 179, passing an economic growth package in September that included permanent section 179 expensing levels at $500,000.
The 113th Congress will return to Washington next week.
Interested in more section 179 background? Here's a recap of the year's Farm Progress coverage on section 179 and bonus depreciation, plus a few section 179 resources for agricultural producers.
Bye Bye Hefty Write-off? (January, 2014)
Why You Should Care About Depreciation Deduction: Section 179 (March, 2014)
Section 179, Renewables Tax Extenders Approved in Senate Committee (April, 2014)
House Passes Tax Extenders Legislation (June, 2014)
Making the Case for Section 179 Tax Break (June, 2014)
Section 179 Tax Benefit May Not Return This Year (July, 2014)