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Depreciation, Expensing Provisions in Tax Package Benefit Producers

A tax extenders package accompanying the $1.15 trillion Consolidated Appropriations Act of 2016 Congress passed ahead of the holiday break has two major provisions benefitting aggregates producers and their contractor customers: an extension of the 50 percent bonus depreciation for capital equipment purchased in 2015–2017, phasing to 40 percent and 30 percent in 2018 and 2019; and, permanent extension of Section 179 expensing limits and phase-out amounts, $500,000 and $2 million, respectively, that were in place from 2010 through 2014 but lapsed to $25,000 and $200,000 this year.

An Associated Equipment Distributors (AED)-led coalition secured the provisions in the final tax and appropriations package, partly on the strength of a late-November letter to the top lawmakers on Capitol Hill – House Speaker Paul Ryan (R-Wis.) and Democratic Leader Nancy Pelosi (D-Calif.); Senate Majority Leader Mitch McConnell (R-Ky.) and Democratic Leader Harry Reid (Nev.) – noting:

"Over the past several years, bonus depreciation has improved cash flow, encouraged adoption of newer, more efficient technology, and created jobs by allowing companies to write off a significant portion of the cost of their new machinery. Similarly, higher Sec. 179 levels have helped small businesses grow and compete by expensing a greater portion of their new and used equipment purchases … Depreciation bonus and higher Sec. 179 levels will be powerful medicine to bolster the construction, distribution and manufacturing sectors and put the economy on track for years of prosperity."

Joining AED in the letter and coalition efforts were the National Stone, Sand and Gravel Association, Portland Cement Association, National Ready Mixed Concrete Association, American Concrete Pipe Association, American Concrete Pressure Pipe Association, Interlocking Concrete Pavement Institute, National Concrete Masonry Association and National Precast Concrete Association.