Growing America’s Small Businesses and Manufacturing Act
The Growing America’s Small Businesses and Manufacturing Act would (1) permanently extend how depreciation, amortization, or depletion are treated when determining the income-based limit on the business interest deduction (the Section 163(j) limit), effective for tax years beginning after December 31, 2024; and (2) boost the Section 179 expensing limits for capital purchases, increasing the amount a small business can deduct upfront for property placed in service after December 31, 2024, with updated inflation adjustments. In simple terms, the bill makes it easier for small businesses and manufacturers to invest in equipment by allowing larger upfront deductions and by permanently reflecting depreciation-related figures in calculating the interest deduction cap. This could improve after-tax cash flow for capital investments, while potentially reducing federal tax revenue.
Key Points
- 1Permanent extension of depreciation/amortization/depletion allowance in calculating the business interest deduction (Section 163(j)(8)(A)(v)); removes the prior sunset clause language referencing taxable years beginning before January 1, 2022. Effective for taxable years beginning after December 31, 2024.
- 2Increase in Section 179 expensing limits:
- 3- Upward change of the upfront expensing cap from $1,000,000 to $2,500,000.
- 4- Increase in the phase-out threshold from $2,500,000 to $4,000,000.
- 5- Inflation adjustment mechanics updated to use 2025 as the new baseline (with alignment to the 2018 basis for certain amounts), and the inflation adjustments tied to calendar year 2024 (and 2017 for certain dollar amounts).
- 6Effective date for Section 179 changes: property placed in service in taxable years beginning after December 31, 2024.
- 7Policy intent: broaden investment incentives for small businesses and manufacturers by enabling larger upfront deductions for equipment and capital assets, while simplifying the long-term tax treatment of such investments through a permanent depreciation-related adjustment to the business interest limitation.