Jan 1, 2016 – The “Protecting Americans from Tax Hikes Act of 2015” (PATH Act) was passed by both the House and Senate and signed into law on 12/18/2015. This bill expanded the Section 179 deduction limit to $500,000. Read the summary from the Ways and Means committee here.
Section 179 Deduction: Until further notice, Section 179 is permanent at the $500,000 level. Businesses exceeding a total of $2 million of purchases in qualifying equipment have the Section 179 deduction phase-out dollar-for-dollar and completely eliminated above $2.5 million. Additionally, the Section 179 cap will be indexed to inflation in $10,000 increments in future years.
50% Bonus Depreciation will be extended through 2019. Businesses of all sizes will be able to depreciate 50 percent of the cost of equipment acquired and put in service during 2015, 2016 and 2017. Then bonus depreciation will phase down to 40 percent in 2018 and 30 percent in 2019.
IMPORTANT: Section 179 for Current 2016 Tax Year (This Year)
Section 179 can provide you with significant tax relief for this 2016 tax year, but equipment and software must be financed and in place by midnight December 31, 2016.
Using a $75,000 equipment cost for a sample calculation shows how taking advantage of the Section 179 Deduction can significantly lower the true cost of the equipment purchased, financed or leased. In the example, $75,000 in equipment purchased has a true cost of $48,750. That’s $26,250 added to your bottom line. Would you like an extra “25 grand-plus” this year?
In order to qualify for the Section 179 Deduction, the equipment must be purchased, financed or leased and put into service by December 31 of this year!
So don’t delay!