This bill permanently extends a specific method for calculating business interest deduction limits and significantly increases the expensing limits for depreciable business assets starting in 2025.
John Barrasso
Senator
WY
The Growing America’s Small Businesses and Manufacturing Act aims to support businesses through significant tax code changes. This bill permanently extends a specific method for calculating business interest expense limitations. Additionally, it substantially increases the immediate expensing limits (Section 179) for purchasing new depreciable business assets. These provisions are designed to encourage investment and growth for small businesses and manufacturers starting in tax years beginning after December 31, 2024.
Small Business Tax Write-Offs Soar to $2.5 Million Starting 2025: Equipment Upgrade Just Got Cheaper
The Growing America’s Small Businesses and Manufacturing Act is a tax bill focused squarely on giving businesses, especially those buying equipment, a big break. Effective for tax years beginning after December 31, 2024, this bill makes two key changes to the tax code that affect how companies manage their cash flow and plan investments.
The $2.5 Million Equipment Upgrade
The biggest headline here is the massive increase in what’s called Section 179 expensing. Think of Section 179 as the immediate write-off rule for business assets like machinery, vehicles, and computer systems. Instead of having to depreciate these purchases over several years, Section 179 lets businesses deduct the full cost right away, which is a huge boost to cash flow.
Currently, the maximum amount a business can immediately write off is $1,000,000. This bill more than doubles that cap, raising it to $2,500,000 (SEC. 3). For a mid-sized manufacturer or a construction company looking to buy several new pieces of heavy equipment, this is a game-changer. They can now deduct a much larger portion of their capital investment in the year they buy it, dramatically lowering their tax bill.
Equally important, the bill raises the phase-out limit. Right now, if a business buys more than $2,500,000 worth of equipment, that immediate write-off starts shrinking. Under this bill, the deduction won’t start phasing out until total purchases hit $4,000,000 (SEC. 3). This change helps those businesses making significant investments, ensuring the largest deductions are still available to them. To keep up with inflation, the bill also updates the base years used for future cost-of-living adjustments, ensuring these limits stay relevant.
Certainty for Business Debt
The second change provides long-term stability for companies that rely on debt—which is basically every business, big or small. This section deals with how businesses calculate their limit on deducting interest expenses (SEC. 2).
Before 2022, there was a temporary rule that allowed businesses to include depreciation and amortization in their calculation of the interest deduction limit. This generally made it easier to deduct more interest. That rule was set to expire, but this bill makes it permanent for tax years starting after 2024 (SEC. 2).
Why does this matter? For companies with high debt loads—like a growing manufacturer that just took out a loan to buy that new $2.5 million machine—this provides crucial certainty. They know they can continue to deduct a higher amount of their interest payments, making long-term financial planning much more predictable and lowering the effective cost of borrowing money. This is especially helpful for capital-intensive industries where debt is a standard part of doing business.