Baucus, Grassley introduce bonus depreciation bill

A bill could be considered this week in the Senate to lower taxes for small businesses by letting them write off more of the cost of purchases, such as equipment and machinery, more quickly than under current law. 

Introduced Monday by Senate Finance Chairman Max Baucus (D‐Mont.) and ranking member Chuck Grassley (R‐Iowa), the legislation will speed up the tax deductions businesses can take for buying new equipment, designed to stimulate investment in small businesses and help create jobs, the lawmakers said in a release. The bill would extend bonus depreciation through 2010. 

The bonus depreciation bill could be considered this week after the Senate dispenses with work on the tax extenders bill, which has been stalled for the past couple of weeks. 

The Senate Finance and Small Business committees are writing another bill to help small businesses that also is rising up the agenda and could come up this week, based on the progress of the tax extenders measure. 

"An extension of bonus depreciation will boost economic activity by hundreds of millions of dollars," Baucus said on the floor Monday. 

Bonus depreciation allows businesses to recover the costs of certain capital expenditures more quickly than under ordinary tax depreciation schedules. Businesses can use bonus depreciation to immediately write off 50 percent of the cost of depreciable property. 

The legislation is designed to help small and large businesses depreciate purchases faster, encouraging them to invest in more equipment, which is often produced by small businesses. Bonus depreciation was enacted as part of 2008 economic stimulus efforts but the provision expired at the end of last year.

Grassley said business investment is needed to fuel the economic recovery. 

"Bonus depreciation is a time-tested temporary incentive for increased business investment," he said.