Important Tax News for Small Businesses
December 20, 2013
With its budgeting work done for the year, Congress this week leaves town for its holiday break. One tax relief measure that lawmakers did not see fit to enact for 2014 is an extension of the current Sec. 179 capital expenditure deduction for small businesses.
Under current tax law, small businesses may expense (immediately deduct) up to $500,000 of investments in qualified equipment. This deduction phases out if a taxpayer purchases more than $2 million of property in the same year. These investment thresholds are scheduled to drop to $25,000 and $200,000, respectively, on Jan. 1, 2014, absent congressional action to retain the 2013 levels. Despite Congress's failure to pass legislation extending the higher limitations through 2014, it's possible that it may act next year to restore the limitations and even apply them retroactively. The ADA will continue to lobby for the higher limitations.