The National Milk Producers Federation thanked the House of Representatives for passing legislation today, by a vote of 272-142, to permanently extend the ability of family farmers and small businesses to write off capital purchases immediately, instead of over time. The bill now faces an uncertain future in the Senate, and a possible veto at the White House. A permanent extension of Section 179 is one of NMPF’s legislative priorities for 2015. The tax provision 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 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.”
The maximum amount of annual expensing under the newly-passed House bill, H.R. 636, is $500,000, as it is for 2014. A 50 percent 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.
“Farmers and ranchers are continually upgrading and adapting to make their businesses more efficient and profitable. Thanks to the immediate expensing that Section 179 allows, farmers and ranchers can put money right back to work by purchasing new equipment and technology with cash instead of taking on unnecessary debt and expenses, said Bob Stallman, President of AFBF. “Temporary fixes and extensions to the tax code are just not enough. Setting the maximum deduction at $500,000, rather than the current rate of $25,000, would give small businesses the certainty they need to invest in the future.”