If passed, a bill currently in the Senate would allow small business owners to write off certain major business expenses in the first year, rather than depreciating these costs over time.
U.S. Sen. Mark Begich introduced the provision as an amendment to the Small Business Jobs and Tax Relief Act.
Begich amended the act to include flexibility on depreciation of improvements such as carpet, sheetrock, lighting and equipment small business owners purchase for their businesses.
“All that expense now can be written off in the first year,” Begich said in a recorded presentation on the Senate Floor, July 11 (goo.gl/0482x). “It is simple, yet has huge impacts.”
The IRS has schedules to depreciate these improvements over the course of more than a decade. Begich proposed what he calls “accelerated” or “bonus” depreciation.
A small business in the 25 percent tax bracket that spends $100,000 on improvements or equipment can receive a tax break of $25,000 in the first year.
The full bill would offer a tax credit when a small business increases its payroll through bonuses, raises or hiring a new employee – equivalent to 10 percent of the increase. The credit would be capped at $500,000.