Buying made affordable

August 1, 2003 By    

Propane marketers in general ­ and small business owners in particular stand to save thousands of dollars in capital costs following the federal tax cuts recently signed into law by President Bush.

The Jobs and Growth Tax Relief Reconciliation Act contains about $330 billion in tax cuts, including capital gains and dividends tax reductions and acceleration of the income tax rate reductions approved by Bush in 2001.

Most significantly, the new tax law contains a hefty increase in the amount of money that small businesses can write off or immediately expense for capital purchases. Previously, the law allowed just $25,000 per year in expensing. That ceiling has been raised to $100,000 per year through 2005.

For the thousands of small companies  in our industry, these long-sought changes are another incentive to invest in your business and help jump-start an embarrassingly lame economy. Combined with unbelievably low rates for borrowing money, there may never be a better time to buy that new bobtail, add another storage tank or invest in the hot, new tank monitoring and
fleet routing technologies to make your business more efficient and competitive. It’s also a golden opportunity to upgrade your regulator valves and install automatic shut-down devices that will make your operations more safe.

The new tax law also allows more businesses to take advantage of this higher expensing limit. Previously, the amount of money a company could expense was reduced by a dollar for each dollar of the cost of capital expenditure beyond $200,000 each year. Those limits have been doubled to
$400,000 per year and should enable more small companies to benefit over the next three years.

In addition, the “bonus” write-off amount companies can claim for the purchase of new equipment has been bumped from 30 percent to 50 percent for items acquired after May 5 of this year and before Jan. 1, 2005.

These changes to the expensing provisions are just one highlight of the new tax law. Additional details are available on the National Propane Gas Association’s web site at

Congratulations to the NPGA staff for their hard work and diligence in helping get these vital changes passed. The association has been pushing this agenda hard since late 2000 and should be justifiably proud of the fruits of those  efforts.

Now it’s up to the folks on the front lines to take advantage of the opportunity to invest in our industry ­ while it’s affordable.

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