The House of Representatives voted 272-142 in favor of a measure granting permanent extension to “Section 179” of the Internal Revenue Service (IRS) tax code. The bill (H.R. 636) extends the ability of family farmers and small businesses to write off capital purchases immediately, instead of over time.
Section 179 is widely used by farmers to buy tractors, farm implements and other equipment. Last December, President Obama signed legislation extending the Section 179 tax credit, along with more than 50 other expired tax provisions, but for 2014 only. That action meant farmers could benefit from the expensing allowance only on the tax forms they are filling out for 2014.
“Dairy farming requires significant investments in machinery and equipment,” said National Milk Producers Federation (NMPF) President & CEO Jim Mulhern. “By allowing producers to immediately write off these purchases, Section 179 gives producers an incentive to invest in their businesses while it reduced their record-keeping burden. This permanent extension provides much greater financial certainty in a year when dairy farmers will see much lower income levels.”
NMPF joined 33 other agricultural organizations in a letter sent Monday urging the House to approve H.R. 636.
The maximum amount of annual expensing under H.R. 636 is $500,000, as it is for 2014. A 50% bonus depreciation for the purchase of new capital assets, including farm equipment, is included.
“Failure to permanently restore Section 179 will add to the financial strains on family farmers who already find it difficult to pass on their farms to the next generation,” Mulhern said.
The bill now faces an uncertain future in the Senate, and a possible veto at the White House.