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Bill Would Permanently Extend Bonus Depreciation, Lift Certain AMT Restrictions For Businesses

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Washington, May 22, 2014 | comments

U.S. Congressman Pat Tiberi (R-OH) today announced the introduction of a bill to encourage economic growth, foster job creation, and increase wages. The bill would help companies better access capital, invest in new facilities and create American jobs by permanently extending 50 percent bonus depreciation – i.e., allowing businesses to deduct immediately, or “expense,” half of the cost of new equipment purchases -- while lifting some restrictions to allow certain tax credits to be used for capital reinvestment, and ensuring more companies may take advantage of bonus depreciation.


“I’ve heard time and again from small business owners in Ohio that extending bonus depreciation is the single biggest factor in allowing their businesses to grow,” said Congressman Tiberi, Chairman of the Ways and Means Subcommittee on Select Revenue Measures. “Allowing companies to use these tools for capital reinvestment is a common-sense way to encourage job creation.”


Specifically, the bill:


·       Permanently Extends 50 percent Bonus Depreciation. Businesses will be able to deduct 50 percent of qualified purchased property immediately. Bonus depreciation was first enacted in 2002, and since then has been increased, extended and allowed to expire multiple times. By making this provision permanent, businesses will have the certainty needed to increase domestic investment, raise wages, and hire more people.

·       Lifts Restrictions To Allow For More Corporate Alternative Minimum Tax Credits To Be Used for Capital Reinvestment. The recent economic situation caused many companies to operate at a loss, hampering their ability to take advantage of bonus depreciation. From April 1, 2008 through 2013 businesses had the option to forego bonus depreciation and instead claim some of their unused Corporate Alternative Minimum Tax credits. The bill would allow for more of these credits – which are essentially overpaid taxes – to be used for capital investment.

·       Expands Definition of Qualifying Property to Include Retail Improvements.  Retailers often renovate the interiors of their stores on a frequent basis.  While bonus depreciation has traditionally applied to retailers that lease their stores, owner-occupied retail stores have been ineligible for bonus depreciation.  By allowing bonus depreciation on all retail improvements, the bill corrects this inequity.


A recent Tax Foundation report found that making bonus expensing permanent would increase the country’s gross domestic product by one percent, increase wages by one percent, create 212,000 jobs, and increase federal tax revenue.



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