Congress Makes Section 179 Expensing Permanent

Included in the omnibus budget and tax reform legislation passed by Congress just before heading home for a holiday recess is a provision making permanent Section 179 in the Internal Revenue Code, which allows certain small business expense (i.e., immediately write off) certain capital expenditures which would otherwise have to be depreciated over many years.  The legislation raises the expensing limitation to $500,000 year, and indexes the amount for inflation increases.  The $250,000 cap on qualified real property is eliminated beginning in 2016.  

The expensing provision has been in the IRS Code for several years, but only with short-term applicability dates.  The new law makes the expensing provision permanent, giving some tax certainty to small businesses.

Also included in the bill is a permanent extension of the 15-year depreciable life for retail, restaurant and leasehold improvements.  The retail industry has been lobbying for a separate depreciable asset for building improvements (not the buildings themselves) for nearly 20 years, so the inclusion of this permanent provision marks a major victory for the industry.