H.R. 4457 (113^th): America’s Small Business Tax Relief Act of 2014

America’s Small Business Tax Relief Act seeks to broaden the amount and scope of expenses that are tax-deductible for small businesses. It does this by removing the exclusions for certain investments and making permanent different deductions that originated as non-permanent parts of various stimulus plans.

The bill was introduced by Congressmen Pat Tiberi [R-OH12] and Ron Kind [D-WI3] to create “stability for small businesses leading to their growth and expansion” by permanently setting the deduction rules for small businesses. The White House has criticized the bill for lacking offsetting revenue measures to make the bill budget-neutral. The Congressional Budget Office estimated that the effects of the bill would increase the deficit by $73 billion by 2024. The Statutory Pay-As-You-Go Act of 2010 prohibits legislation that would increase projected deficits, however the text of this bill excludes itself from those requirements.

The bill makes permanent the $500,000 deduction cap and the $2,000,000 investment limitation under section 179. The deduction cap defines the maximum amount of investment under section 179 that can be deducted in a given year. The investment limit is the point at which the tax deduction begins to be reduced by the amount of investment exceeding the limit. Without any congressional action, the limits revert, as of January 1, 2014, to $25,000 and $200,000 respectively. The changes enacted by this bill would retroactively take effect as of December 31, 2013.

The bill also makes permanent the inclusion of computer software as property under section 179 and removes the exclusion of air conditioning and heating units from property covered under section 179.

The bill removes the limitation that no more than $250,000 of the costs deducted can come from qualified real property, which is defined as qualified leasehold improvement property, qualified restaurant property, or qualified retail improvement property.

The bill also ties the deduction cap and investment limitation to inflation, rounded to the nearest $10,000. This allows the values to keep pace with changes to the cost-of-living index without congressional action.

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Jun 12, 2014.

America's Small Business Tax Relief Act of 2014 - Amends the Internal Revenue Code, with respect to the expensing allowance for depreciable business property, to make permanent: (1) the increased $500,000 expensing allowance for such property, (2) the increased $2,000,000 threshold amount for such property over which the amount of the expensing allowance is reduced, (3) expensing of computer software, and (4) rules for the expensing of qualified real property (i.e., leasehold improvement, restaurant, and retail improvement property).  Allow an inflation adjustment to the dollar amounts of the expensing allowance for taxable years beginning after 2014. Eliminates the exclusion of air conditioning and heating units as property eligible for the expensing allowance.

Prohibits the entry of the budgetary effects of this Act on any PAYGO (Pay-As-You-Go) scorecard.