Washington, DC- Today, U.S. Senator Bob Casey (D-PA) announced that he has introduced bipartisan legislation with Senator Susan Collins (R-ME) that would make changes to the tax code that would give small businesses more certainty so they can expand and create jobs.
“This legislation is all about building on bipartisan, commonsense proposals that help small businesses make expansions and add employees,” Senator Casey said. “In the current tax code some small businesses are unable to reap the tax benefits of an expansion for 30 years. This legislation recognizes the realities of today’s economy and changes that so businesses that expand and create jobs can write down those costs in a reasonable timeframe.”
The Small Business Tax Certainty and Growth Act would provide small businesses with the certainty they need to make long-range investment plans by making permanent the maximum allowable deduction under Section 179 of the Internal Revenue Code. Section 179 allows small businesses to more rapidly deduct the cost of acquired assets. The amount of the maximum allowable deduction has changed three times in the past six years, and is usually addressed as a year-end “extender,” making this tax benefit unpredictable from year to year, and therefore difficult for small businesses to take full advantage of in their long-range planning. This bill would permanently set the maximum allowable deduction at $250,000, indexed for inflation, and ensure that only small businesses can avail themselves of the benefit by phasing it out as acquisitions exceed $800,000. The bill further encourages capital investment by extending, for one year, provisions that benefit businesses of all sizes: “bonus depreciation” and 15-year depreciation for improvements with respect to restaurants, retail facilities and leaseholds.
The bill also allows more companies to use the simpler cash method of accounting by permanently doubling the threshold at which the accrual method is required, from $5 million in gross receipts to $10 million, indexed for inflation. The bill also expands the ability to use more simplified methods of accounting for inventories, reducing complexity for small businesses that produce goods.
Finally, the bill would permanently double the deduction for business start-up expenses from $5,000 to $10,000. This would help ease the tax burden on new businesses. This provision is targeted to provide a benefit only to small businesses by phasing out the deduction as start-up expenses exceed $60,000.