December 17, 2015

U.S. House of Representatives Passes Variety of Tax Provisions

Today, the U.S. House of Representatives passed legislation to extend or make permanent several tax provisions. The legislation will be considered by the Senate tomorrow. Western Growers has been engaged on several of the items included in this package and applauds Congress for providing greater tax certainty through this legislation.

The legislation will make Section 179 permanent at the $500,000 level. Under the provision, once equipment purchases total $2 million the allowed Section 179 amount will start to phase out dollar-for-dollar and no additional amount will be allowed after $2.5 million. Additionally, the $500,000 and $2 million amounts will be indexed for inflation starting in 2016. The current amounts in place are an expense limitation of $25,000 and a phase out of $200,000, but under this legislation those amounts will be permanently elevated to the 2010-2014 levels.

Bonus depreciation has been extended but modified through 2019. For property placed in service from 2015 through 2017, the bonus depreciation is 50 percent, but it phases down to 40 percent in 2018 and 30 percent in 2019. One key provision for Western Growers members is that bonus depreciation will now permit certain vines, trees, and plants bearing fruit or nuts to qualify for bonus depreciation when planted or grafted rather than when they are placed into service.  

The legislation permanently extends the charitable deduction for contributions of real property intended for conservation purposes, including the enhanced deduction for certain individual and corporate farmers. Tax credits for the building of solar energy production facilities have been extended, with the credit remaining at 30 percent through 2019 and thereafter going to 26 percent in 2020, 22 percent in 2021, 10 percent in 2022 and then to zero after 2022.

The tax legislation would also allow for charitable contributions to agricultural research organizations to become tax deductible. This is a concept Western Growers has supported for several years and has been championed by Rep. Devin Nunes (R-CA) as well as Senator Debbie Stabenow (D-MI).

For additional details please refer to the section-by-section summary of the legislation. Please contact Western Growers Senior Director of Federal Government Affairs Ken Barbic at (202) 296-0191 for more information.