On April 24, Representative Vito Fossella (R-N.Y.) introduced the Small Business Capital Expansion and Improvement Act (H.R. 5906), which builds upon the Section 179 Expensing law by allowing small businesses to take the same deduction for capital improvements.

This legislation, cosponsored by Reps. Dan Boren (D-Okla.) and Wally Herger (R-Calif.), would allow for deductions of new equipment purchases to include capital investment and improvements for small businesses with under $5 million in gross receipts. Small employers would be able to immediately expense up to $125,000 of the cost of such capital improvements, similar to what they currently do for new equipment purchases under Section 179 of the tax code.

Under current law, small-business owners are able to expense qualified property including new machinery, computer equipment and off-the-shelf software, but not capital improvements, such as a new roof or an addition to an existing structure. This legislations aims to expand this law in order to provide additional incentives so owners can improve and make investments in their businesses.

During introduction of the bill, the lawmakers contended it is critical that our nation’s small-business owners have the ability to expense a broader array of capital property.

Herger stated, "By expensing more, companies will clear up valuable cash flow for physical overhead, and be able to invest more in workforce development, hire new employees, and pay more in wages. This is exactly the kind of pro-growth tax flexibility we need, especially now."