Bonus Depreciation Language Likely Included in Tax Extenders/Federal Spending Bill

On December 11, the House cleared a five-day extension of federal spending in order to avert a government shutdown. The negotiations of the $1.1 trillion bill are taking much longer than anticipated which might indicate a larger bill containing a tax extenders package is on the horizon. The biggest delay in introducing the spending bill, also referred to as the Omnibus, are Republican policy riders and a provision to repeal the crude oil export ban. Since this is a must pass bill, Republicans and Democrats are crafting a measure that will provide a big win for their respective parties. The House is expected to introduce the Omnibus and tax extenders package on Tuesday and then the Senate will combine both into one broad package.

In lieu of a firm deal, a backup tax extenders bill was introduced and passed in the House Ways and Means Committee on December 7. HR 34, the Tax Increase Prevention and Real Estate Investment Act of 2015, is a two-year bill that includes the earned income tax credit and a delay in the Obamacare "Cadillac" Tax. Also included in the measure is a provision important to the ready mixed concrete industry to extend the 50 percent bonus depreciation for property purchased in 2015 or 2016 and a provision to extend expensing limits and phase-out amounts for Section 179 to $500,000 and $2 million, respectively. The current expense limit is $25,000 and the phase-out amount is $200,000. Congress is still negotiating the final details of the tax extenders package which is set to expire at the end of this year. While the details are not public yet, it is highly likely that there will be a provision to extend bonus depreciation and increase Section 179 expensing levels.