HR 354119th CongressIn Committee

Small Business Growth Act

Introduced: Jan 13, 2025

Standard Summary

Comprehensive overview in 1-2 paragraphs

The Small Business Growth Act would raise the annual maximum deduction allowed under Section 179 for expensing depreciable business assets from $1,000,000 to $2,000,000 and increase the phase-out threshold from $2,500,000 to $3,500,000. It also updates the inflation adjustment rules by changing the base years used to index these amounts. The changes would take effect for property placed in service in tax years beginning after December 31, 2025 (i.e., starting in 2026). The overarching goal is to give small businesses a larger incentive to invest in equipment and other depreciable assets by allowing more of those purchases to be expensed upfront rather than depreciated over time.

Key Points

1Expenditure cap increase: Section 179 expensing limit rises from $1,000,000 to $2,000,000.
2Phase-out threshold increase: The amount of investments that triggers a reduction in the deduction rises from $2,500,000 to $3,500,000.
3Inflation indexing adjustments: The bill updates the inflation adjustment rules so the base years used for indexing are changed (2018 to 2026 for certain figures, and 2017 to 2025 for others), affecting how future increases are calculated.
4Effective date: These changes apply to property placed in service in taxable years beginning after December 31, 2025 (i.e., starting in 2026).
5Scope and limits: The bill does not alter other existing 179 rules beyond the two dollar amounts and the inflation indexing framework; the general limits (such as the requirement that deductions cannot exceed taxable income from the business, and other existing 179 constraints) would continue to apply unless specifically amended.

Impact Areas

Primary group/area affected: Small businesses and any business that makes significant investments in depreciable equipment and assets that qualify for Section 179 expensing (e.g., manufacturing, retail, service sectors).Secondary group/area affected: Equipment suppliers and dealers, tax professionals, and accountants who work with 179 expensing provisions; potential shifts in capital budgeting and purchasing decisions.Additional impacts: Potential reduction in short-term federal revenue due to larger upfront deductions; increased incentive for asset purchases in 2026 and beyond; inflation-indexed adjustments may gradually raise future limits as prices and investment levels rise.

Generated by gpt-5-nano on Nov 18, 2025