DHA, Hardwood Federation push for tax break on equipment

The Hardwood Federation is urging the senate to extend tax breaks that allows manufacturers to write off 100 percent of the value of an asset in the year in which that asset is purchased.

Photo By Decorative Hardwood Association

WASHINGTON -- More than 30 wood-related trade associations have signed on to a Hardwood Federation letter advocating for the extension of bonus depreciation: the ability to fully expense the cost of capital expenditures when purchased. 

The Decorative Hardwoods Association reported that the tax break will begin to phase out in 2023 and will be completely eliminated in 2027. 

The ability to write off 100% of an asset—like a kiln, boiler, forklift, or truck—when it's purchased allows companies to reduce short-term taxable income and has been critical to helping small and medium-sized wood products companies continue to operate, according to the DHA. These companies are located primarily in rural communities across the country.

In a letter from Dana Lee Cole, executive director of the  Hardwood Federation, she asked Ron Wyden, chairman, and Mike Crapo, a ranking member on the Finance Committee of the U.S. Senate, to consider extending bonus depreciation on equipment.

“On behalf of the Hardwood Federation, we urge you to prioritize extending an important tax provision which is scheduled to begin phasing out next year,” wrote Cole. 

In the letter, she said that the “ability to write off 100 percent of the value of an asset in the year in which that asset is purchased has been critical.”

“While hardwood lumber companies are relatively smaller in scale, we nonetheless incur considerable capital expenditures on equipment to run our daily operations. Our members regularly invest in new dry kilns, boilers, forklifts, trucks and other equipment essential to producing hardwood products and moving them to our end customers.”

For more than two decades, the tax code has allowed for some form of first year expensing known as bonus depreciation, a tax incentive that allows a business to immediately deduct a large percentage of the purchase price of eligible assets, such as machinery, rather than write them off over the "useful life" of that asset. Since 2017, businesses have been able to deduct 100% of depreciation upfront on their Federal tax return. Known as full expensing, this accelerated depreciation method has allowed our member companies to continue to invest in their businesses, despite challenging economic conditions over the last few years.
 

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Larry Adams | Editor

Larry Adams is a Chicago-based writer and editor who writes about how things get done. A former wire service and community newspaper reporter, Larry is an award-winning writer with more than three decades of experience. In addition to writing about woodworking, he has covered science, metrology, metalworking, industrial design, quality control, imaging, Swiss and micromanufacturing . He was previously a Tabbie Award winner for his coverage of nano-based coatings technology for the automotive industry. Larry volunteers for the historic preservation group, the Kalo Foundation/Ianelli Studios, and the science-based group, Chicago Council on Science and Technology (C2ST).