Some 39 agribusiness groups, from growers to lenders, asked congressional leaders in a letter to revive two tax breaks for equipment purchases as part of a multi-year tax “extenders” package. The tax breaks, known as Section 179 and bonus depreciation, were among four-dozen tax incentives, including the $1-a-gallon biodiesel tax credit, that expired at the end of 2014.
As it now stands, Section 179 allows small businesses to immediately deduct on income taxes up to $25,000 of assets rather than depreciate them over time. The expired provision, enacted as part of the 2009 economic stimulus package, had a maximum limit of $500,000. The bonus depreciation language allowed taxpayers to deduct an additional 50 percent for the first year of depreciation of the value of qualifying property. Both provisions make it easier for farmers and ranchers to buy machinery and buildings. They would reduce tax collections by an estimated $7.5 billion over 10 years.
“We are concerned that the failure to renew these expired provisions of the tax code will place additional burdens on farm and ranch families who are asset-rich and cash-poor and already face the uncertainties of weather, market prices and international competition,” said the letter signed by groups that include farmer and rancher organizations, veterinarians, processors and the Professional Rodeo Cowboys Association.
The Senate Finance Committee approved a two-year “extenders” bill, retroactive to Jan. 1, last summer but it has not seen floor action. The House has voted to make permanent a few of the five dozen incentives that are part of the Senate bill. Finance Committee leaders told Agri-Pulse that it was vital to pass a bill extending the tax breaks for two years, or longer.