Congress raises small-business tax deduction, cutting federal revenue with no offset

What it does

This bill increases the amount of business equipment and assets that small businesses can immediately deduct from their taxes in a single year, rather than depreciating them over time. It raises the annual expensing limit from $1 million to $2 million and the total investment threshold from $2.5 million to $3.5 million, and resets the inflation-adjustment baseline to 2026, making these higher limits the new starting point for future inflation adjustments. The changes apply to equipment purchased and placed in service after December 31, 2025.

Why we flagged it

The bill's sole operative mechanism is a tax deduction increase for business capital expenditures. It is a straightforward tax-code amendment with no riders, no hidden provisions, and no concealment—the title accurately describes the function.

What the text implies

• The rebase of the inflation-adjustment baseline from 2018 to 2026 locks in higher nominal expensing limits for the next decade, effectively front-loading tax relief and reducing future inflation-driven increases in the deduction cap.
• Pass-through entities (S-corps, LLCs, partnerships) benefit disproportionately because owners can claim the deduction on their personal returns, creating a tax advantage relative to C-corporations subject to the corporate rate.
• The higher thresholds may incentivize businesses to accelerate capital purchases into 2026 and beyond, potentially distorting investment timing and creating temporary demand spikes in equipment markets.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Small business owners and self-employed individuals benefit from lower tax bills and faster capital recovery, which may support business investment and job creation. However, the bill reduces federal tax revenue without offsetting spending cuts or revenue sources, potentially shifting the tax burden to other taxpayers or increasing deficits, and the benefit is concentrated among businesses with sufficient capital to invest in depreciable assets—not workers, consumers, or lower-income households.

Who stands to gain

• small business owners
• pass-through entities (S-corps, LLCs, partnerships)
• self-employed individuals
• equipment manufacturers and dealers

Named in the bill

Internal Revenue Code Section 179, U.S. Department of Treasury, Small businesses, Pass-through entities

Where it stands

8 cosponsors: 8 Republicans.

• Jan 13, 2025 — Introduced · Congress.gov: “Introduced in House”
• Jan 13, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

3 lobbying clients named this bill on 4 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $1,336,377 in lobbying spend. A filing names 67 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 61% of bills with at least one filing.

Blake Moore, the sponsor, reported $1,475,500 in PAC receipts in the 2026 cycle.

• American Trucking Associations — $720,000 on 1 filing
• National Roofing Contractors Association — $400,000 on 2 filings
• Associated General Contractors of America — $216,377 on 1 filing

Lobbying Disclosure Act filings through Jul 21, 2026. A filing shows who paid to lobby on a bill it names, not what changed.