Update, November 2015: While the House has approved permanent extension, the Senate Finance Committee passed a tax extenders package covering Section 179 earlier this year, but it has not been considered by the full Senate. To renew interest, ag groups on Nov. 16 sent a letter to Congress advocating for action on Section 179 before the end of the year.
The House of Representatives on Friday approved with a 272-142 vote permanent extension of higher expensing levels for Section 179, a provision that allows farmers and small businesses to write off capital purchases immediately.
The measure was passed out of House Committee last week. The bill now moves to the Senate.
The measure makes higher Section 179 expensing levels experienced through the 2010-2014 tax years permanent. This would allow farmers, ranchers and small business owners to deduct up to $500,000 in qualifying expenses with a phase-out threshold of $2 million.
A 50% bonus depreciation for the purchase of new capital assets, including farm equipment, also is included in the measure.
If the Senate does not agree to the House's extension option or a variant thereof, the deduction level will remain standing for the 2015 tax year at $25,000.
Last year, lawmakers in December debated extending higher expensing levels under the measure, arriving at a one-year extension for the 2014 tax year. That left farmers little time to make purchases before the Dec. 31 deadline for tax year 2014.
The House's latest approval, however, faces an uncertain future in the Senate, where a shorter extension period was favored last year. Full tax reform in lieu of extenders may also be considered.
In a statement, National Milk Producers Federation President Jim Mulhern said the House's move on permanent higher Section 179 expensing is welcomed by dairy farmers.
"Dairy farming requires significant investments in machinery and equipment. 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."