Iowa Corn Growers Association (ICGA) applauds Congress today for passage of a number of tax provisions set to expire at the end of this year. Both the U.S. House and U.S. Senate approved the Protecting Americans from Tax Hikes (PATH) Act containing a $650 billon tax package, which provides extensions to the IRS Section 179 small business expensing and bonus depreciation provisions.
“Extension of or making permanent bonus depreciation and Section 179 was a top priority for the ICGA in 2015 because it directly impacts on-farm profitability,” said Bob Hemesath, a Decorah farmer and President of ICGA. “We thank the Iowa Delegation for their bipartisan support of this legislation, providing farmers much-needed tax relief on critical capital expenses and equipment investments.”
The Section 179 provision permanently extends the small business deduction for capital expenses at $500,000, and retroactively applies it for 2015. Last December, lawmakers restored the maximum amount for Section 179 allowing farmers to claim $500,000 in capital investments for 2014. This deduction dropped back to $25,000 this year after the extension ran out. Section 179 is a key tool for farmers and small businesses alike as it allows businesses to deduct the full purchase price of qualifying equipment (new or used) and/or software purchased or financed during the tax year from gross income.
Also, language was included to extend the 50 percent bonus depreciation provision, allowing businesses to deduct equipment costs as well as deduct the purchase price of new equipment. The bonus depreciation extension covers the next five years, at 50 percent for 2015-2017, 40 percent in 2018, and 30 percent in 2019.
Uncertainty in the tax code can be one of the biggest challenges that face farmers. Without knowing what the rules will be, it makes it extremely difficult for farmers to make decisions about input and equipment purchases, farm sales and rental agreements.
“Iowa farm families rely on these tax provisions to manage their cash flow and reinvest in their businesses which supports Iowa’s rural economy,” said Hemesath. “In a year when taxable income will be lower, reliable tax deductions are extremely important. This legislation will provide that certainty for the foreseeable future.”
The Iowa Corn Growers Association (ICGA) is an 8,000-member strong grassroots-driven organization, headquartered in Johnston, Iowa, serving members across the state, and lobbying on agricultural issues on behalf of its farmer members to create opportunities for long-term Iowa corn grower profitability. For more information, visit iowacorn.org.