Congress raises small-business tax deduction, cutting federal revenue with no offset
H.R. 354 — Small Business Growth Act · Filed by Blake Moore (R-UT) · 8 cosponsors · Introduced Jan 13, 2025 · Referred to committee
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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 full analysis lists 3 implications of this text.
Who stands to gain
small business owners; pass-through entities (S-corps, LLCs, partnerships); self-employed individuals