12.16.15

SCHUMER ANNOUNCES JUST-UNVEILED TAX PACKAGE WOULD BOOST INCENTIVE FOR SMALL BIZ & FAMILY FARMERS TO PURCHSAE EQUIPMENT; TAX BENEFIT THAT ALLOWS THEM TO RECOVER UP-FRONT COSTS OF EXPENSIVE EQUIPMENT WOULD BE MADE PERMANENT

Federal Restriction Greatly Constricted Small Businesses’ & Family Farmers’ Ability To Purchase Expensive Equipment; Are Forced To Use Old & Inefficient Equipment Until It Breaks Down, Stagnating Growth, Constricting Already-Tight Profit Margins and Sometimes Delaying Growth

Schumer Secured Incentives For Small Business & Family Farmers in Must Pass Legislation; Tax Benefits Will Allow Farmers and Small Businesses To Recover Up to $2 Million in Equipment Costs a Year; Ultimately Will Save Money

Schumer: Permanent Equipment Tax Benefits Would Be A Boon For Small Businesses & Family Farmers Across Upstate NY

U.S. Senator Charles E. Schumer today announced the just-unveiled tax package would make important tax benefits for small businesses and farmers a permanent part of the tax code. As a part of the Protecting American From Tax Hikes Act of 2015, Schumer secured the restoration and permanent extension of key provisions of Section 179 of the tax code. Section 179 tax deductions help family farmers and small businesses purchase expensive new or used equipment to invest in their businesses. The 179 expansions included in the Protecting American From Tax Hikes Act of 2015 would permanently increase the 2014 expensing limit for a single purchase to $500,000 and increase the annual phase-out threshold to $2,000,000, up from current limits of $25,000 and $500,000 respectively. This year, Schumer pushed for adjustments to both Section 179 and 168 of the tax code to help famers and small business who are having difficulty financing large equipment purchases. Schumer pushed to amend Sec. 168 of the tax code to allow farmers to recover the cost of depreciating farm equipment over 5 years instead of 7. While this adjustment was not considered in the “tax extenders” package, Schumer secured the permanent expansion of expensing limits for the Sec. 179 tax deduction, which would be an even bigger boon for farmers and small businesses.

“Farmers and small businesses throughout Upstate NY need consistent tax incentives to allow them to purchase the critical equipment needed for their businesses to operate and grow. Allowing them to take advantage of the expanded 179 benefit – and on a permanent basis – would be good for business. That is why I am urging my colleagues on both sides of the aisle and in both chambers of Congress to vote for this bill so we can send this to the President’s desk. Providing business and farmers with a fair and consistent tax benefit for purchasing expensive equipment provides vital support for our hard-working farmers across New York and supports the entire Upstate economy,” said Schumer.

Section 179 of the tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. This provision allows farmers and small businesses that buy (or lease) a piece of qualifying equipment to deduct the full purchase price from their gross income, under certain limits. Section 179 was created to encourage businesses to buy equipment and invest in themselves. Farmers across the country rely on this deduction to recover the upfront cost of expensive farm equipment. However, Sec. 179 expensing limits reverted from $500,000 for a single capital investment and an annual phase-out threshold of $2,000,000 to their previous limits of $25,000 for a single capital investment purchase and an annual phase-out threshold of $200,000 at the end of 2014. These lower limits constrain farmers from purchasing large expensive equipment they need. Moreover, the amount of the maximum allowable deduction has changed three times in the past six years, and is usually addressed as a year-end “extenders package,” making this tax benefit unpredictable and therefore difficult for small businesses and farmers to take full advantage of in their long-range planning.

For example, Jim Henderson who has a 2,100 acre farm in Yates County needs a new combine, but a new combine is expected to cost approximately $550,000. Financing for such equipment is difficult for a family farm with limited financing opportunities, but tax incentives can improve cash flow and give businesses the boost they need to purchase expensive equipment. Currently Jim would only be able to deduct $25,000 of the price of a new combine, but with the expansions Schumer secured, Jim will be able to deduct $500,000 of his purchase. The 179 expansions included in the Protecting American From Tax Hikes Act of 2015 would permanently increase the expensing limit for a single capital purchase to $500,000 and increase the annual phase-out threshold to $2,000,000, so Jim can now deduct nearly the full cost of a new combine from his farm’s gross income and know with certainty that this deduction will be available for years to come.

Schumer cosponsored the bipartisan Small Business Tax Certainty and Growth Act, which would permanently increase 179 expensing limits. The Protecting American From Tax Hikes Act of 2015 would extend the higher 179 expensing limits permanently.

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