WASHINGTON (NAFB) – Freshly passed, tax break extensions for farm equipment and livestock run out again, at midnight Wednesday. It’s the result of very late action by Congress this year.
The 113th Congress was almost the least productive in modern history, but after completing over a third of its total workload in the lame duck session, it lost the “least productive” distinction to the Congress that preceded it, by a margin of 13 laws passed.
According to American Farm Bureau, a testimony to Congressional inaction is the perennial collection of about 50 tax breaks called tax extenders, only just renewed last week for calendar year 2014. They expire again at midnight tomorrow, just as the new year is rung in.
“There are very few days left for farmers to go out and purchase equipment that they need to upgrade their operation,” says AFB tax advisor Pat Wolff. “It could well be that the only reason the farmer can make that tractor cash flow, is with the use of the tax incentive.”
Those incentives are worth a half million dollars in single-year tax expensing, instead of the $25,000 deduction rate that kicks in again at midnight tomorrow. The outgoing Congress tried, without success, to reach a more permanent tax deal, but failed to stop the year-to-year uncertainty over tax breaks.
“There was a tentative agreement reached between the House and Senate to make both [section 179 expensing] and bonus depreciation permanent,” says Wolff, “but that was a tentative deal that did not ever get to the House or Senate floors.”
Incoming tax committee chairs Utah Senator Orin Hatch and Wisconsin Congressman Paul Ryan will move ahead with tax reform. Wolfe says both are committed to moving in a new direction, which she says, includes adding certainty to the tax code.
To hear more about changes to the tax code next year from the American Farm Bureau Federation, click the audio player above this story.