Washington, DC, May 12, 2006--The National Federation of Independent Business, the nation’s largest small-business group, today applauded Congress for passing H.R. 4297, the Tax Increase Prevention and Reconciliation Act of 2005 Conference Report.
The legislation includes key provisions that encourage small-business owners to continue to grow and expand their businesses and move the American economy forward.
The key small-business provision in the legislation is a two-year extension for Section 179 expensing. The Jobs and Growth Act of 2003 originally increased Section 179 expensing limits, but the increased limits were scheduled to expire after 2007. The legislation passed by the U.S. Senate today, following approval by the U.S. House yesterday, extends the increased expensing limits through 2009. The expensing limits increased from $25,000 to $100,000 the amount of new investment a business can expense in a given year. The law also increased from $200,000 to $400,000 the amount of total investment a business can make in a year and still fully qualify for expensing under Section 179.
“Allowing small firms to immediately expense critical investments has proven to be a key component of our economic recovery and continued expansion,” said Dan Danner, executive vice president of NFIB. “These increases have put money back into the hands of small-business owners to hire new employees, purchase new equipment and expand their facilities—all significant factors contributing to our robust economy.”
According to NFIB's May 2006 Small Business Economic Trends Report, 62 percent of small-business owners reported capital outlays over the past six months. Of those reporting, 46 percent acquired new equipment, 25 percent purchased a new vehicle, 16 percent bought furniture, 16 percent improved and/or expanded existing facilities and 7 percent built new facilities.
“When small-business owners have extra money to invest and grow their business, they jump at the opportunity to do so, which results in more money being pumped into the American economy. NFIB is gratified that lawmakers recognize the benefits of the increased small-business expensing limits and choose to extend the increased limits until 2009,” said Danner. “We look forward to working with Congress in the upcoming years to make these increased small-business expensing limits permanent.”
The tax bill also includes an extension of the Alternative Minimum Tax patch. The AMT is becoming a growing concern as it causes additional burdens for small-business owners when filing their taxes and complicates deducting interest on loans that small businesses use for purchases often made under Section 179.
The U.S. House passed the Conference Report on Wednesday, May 10, by a vote of 244-185, and the U.S. Senate voted 54-44 today. The tax bill now goes to the president for his approval.
