SALEM, Ohio — The federal government approved spending and taxation legislation Dec. 18 that will fund the government through September 2016, and also provide various incentives to farmers, including certain tax breaks on equipment purchases.
Known as the Omnibus Appropriations Act — the bill is a combination of many end-of-year bills, including appropriations that fund the different federal agencies. It includes total spending of more than $1 trillion, and tax breaks of nearly $700 billion.
For farmers and other business owners, the tax bill is seen as an early Christmas gift, because it achieved bipartisan support in permanently capping small business deductions for capital expenses at $500,000, an increase from the previous limit, of $25,000.
The bill also extends the existing bonus depreciation for the purchase of new capital assets for another five years, at 50 percent for 2015-2017, 40 percent in 2018 and 30 percent in 2019.
The bill cleared the U.S. House of Representatives by a vote of 316-113; and was approved by the Senate 65-33. The President signed it into law Dec. 18.
Farm groups pleased
Many farm organizations, including the National Corn Growers Association — applauded the bill’s passage.
“These tax provisions allow farmers to reinvest in their operations — and that has a ripple effect across the entire agriculture industry and rural communities,” said NCGA President Chip Bowling, in a released statement.
The American Farm Bureau Federation said the legislation (often called a tax extender) helps farmers reinvest in their businesses.
“This tax extender package gives farmers and ranchers critical tools to help them reinvest in their businesses,” AFBF President Bob Stallman said, in a released statement. “Tax provisions like Section 179 small business expensing and bonus deprecation free up cash flow for farmers and ranchers to put their money to work.”
Stallman said the new law will let farmers make upgrades that reduce costs, increase efficiency and help make their businesses sustainable for generations to come.
House Ag Committee Chairman K. Michael Conaway, R-Texas, called the bill a “responsible funding bill,” and said it’s “a win for rural America.”
Need for certainty
Larry Gearhardt, tax specialist at Ohio State University, said that as of Dec. 17, it was still unclear whether Congress would pass a tax bill by year’s end, or whether, like previous years, the bill would be drug into January, and require retroactive action.
“The thing that we need in tax law is certainty,” he said. “Businesses want to know what the tax ramifications are going to be (for) their decisions.”
Now that the bill has passed, there should be more certainty for farmers who are considering equipment purchases.
Purchasing trends
However, Gearhardt said with the meager profit margins farmers are facing, it’s unlikely there will be a rush of farmers who want to buy new equipment.
Still, the action by Congress and the president will help most farmers, even if it’s as simple as knowing ahead of time what next year’s tax forms will look like, and what to expect from future equipment purchases.
Related:
- More provisions that relate to agriculture. (Dec. 22, 2015)
Yeah…1.14 TRILLION $$ of debt added to our future kids , on top of TRILLIONS $$ debt already. You forgot to mention all the waste like giving HUNDREDS OF MILLION $$ for the SYRYIAN refugees who are cowardly leaving their country so that American/European/Russian soldiers can be killed fighting THEIR fight…Open your eyes and see the total picture-not the few crumbs given to make it look good.
Thanks for commenting on our story. As you noted, the bill, and package of bills that were added, are very diverse and include many things. We focused mostly on the ag provisions, but there are certainly many others.