U.S. Senator Tom Udall (D-NM) has announced that he has introduced legislation with Senator Jeff Flake (R-AZ) to preserve a tax deduction that helps businesses buy the equipment they need to grow, at the levels that will encourage job creation and economic growth.
“Next year, New Mexico’s small businesses face the significant loss of the section 179 deduction that encourages them to make investments in the equipment, office space and technology they need to keep their doors open and expand their businesses,” Udall said. “Now is not the time to limit an important tool that our small businesses depend on. I will do everything I can to support our small businesses so they can continue to keep our economy going and create jobs.”
Section 179 allows businesses to deduct from their gross income – up to a set limit – the purchase price of qualified machinery, software and real property, among other investments, that are placed in service.
If Congress does not act, this section of the tax code stands to be all but eliminated in 2014. The amount businesses can deduct from their taxes will drop 95 percent to $25,000.
To remedy this, the Small Business Investment Promotion Act would allow businesses to deduct up to $250,000 of certain purchases and is indexed for inflation.
The Small Business Investment Promotion Act is supported by the National Federation of Independent Business (NFIB) and the National Small Business Association.
The introduction of this bill comes on the heels of two others last week to support small businesses. The Helping Our Middle Class Entrepreneurs (HOME) Act and the Expanding Opportunities for Main Street Act are the result of Udall’s conversations with small business owners across New Mexico about ways the federal government can streamline contracting and reduce unnecessary red tape.
Udall’s bipartisan HOME Act would help business owners who operate primarily out of their homes with the often-complicated process of filing income taxes. Under the current system, home-office business owners often struggle to calculate expenses, depreciation and carryovers on their homes. Udall’s bill, which is cosponsored by Sen. John Boozman (R-AR), would allow business owners to take an optional standard deduction of $1,500.
The Expanding Opportunities for Main Street Act would help small business owners compete for federal contracting opportunities and create a database of qualified minority-owned subcontracting firms. The bill is supported by the United States Hispanic Chamber of Commerce, among other groups.