A number of tax provisions that are essential to small businesses and rural economies are now permanent thanks to the efforts of Farm Bureau members and staff.
For the last few years, Congress has approved one- or two-year extensions of some small business tax provisions. Over the past year, Farm Bureau has focused on explaining to members of Congress that while the extensions are helpful, not knowing from one year to the next whether those tax provisions would be available made it challenging for farmers to make the best decisions about equipment purchases and other farm investments.
Congress has now made permanent a number of Farm Bureau-supported tax incentives. A significant one is the Section 179 small business expensing, which was permanently approved for a maximum of $500,000 (up from a limit of $25,000) and indexed for inflation. Because farm income fluctuates from year to year, it’s important for farmers to be able to deduct investments in property, equipment and computer software in a good year instead of depreciating the cost over time.
Congress also provided for an additional 50 percent bonus depreciation for the purchase of new capital assets, including agricultural equipment, through 2017, 40 percent for 2018 and 30 percent for 2019. For the first time, trees, vines and plants bearing fruits or nuts are included.
Also made permanent were provisions related to the donations of conservation easements, food donations (expanded for people using cash accounting), deductions for state and local sales taxes and charitable contributions to ag research organizations.
Provisions for home-grown, renewable fuels, which expired at the end of 2014, were extended through 2016.