The last few years have been tough ones for small business operators. This past June they received a bit of good news that could provide some financial relief. The House of Representatives voted to permanently extend a tax deduction on qualifying equipment.
The original rule allowed for depreciating the costs, which were capped at $125,000. In 2008 the deduction was slated for cancellation but instead was included in a series of stimulus packages. The country’s economic woes prompted the cap to get bumped up to $500,000. However, lack of Congressional interest in the issue in 2013 resulted in the limits dropping to $25,000 effective January 1, 2014.
A revival of the $500,000 limit was included in the doomed tax extenders package earlier this year. However, the move made its way back to the House as part of H.R. 4457, America’s Small Business Tax Relief Act of 2014. Not only does it call for making the deduction permanent and raising the ceiling back to $500,000, it makes the cap retroactive to the first of the year.
The bill still faces some hurdles before becoming official. The White House has raised objections, claiming it benefits businesses but not individual taxpayers. In addition, the Senate is supporting only a two-year extension as opposed to a permanent change. Due to the controversy, it’s unlikely that much action will take place until after November elections.
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