Section 179 Update / Increased Expensing Passes

Capitol Photo

Section 179 PASSED. $500,000 Deduction Time Running Out.

On Friday December 18, President Obama Signed the $1.8 Spending and Tax Bill Into Law.  Earlier on Friday, the Senate gave final congressional approval to the bill, which includes nearly $700 billion in tax breaks.

The legislation extends more than 50 expiring tax cuts, with more than 20 becoming permanent, including increasing the maximum amount for small business expensing under IRS section 179 to $500,000.  This would be reduced if the cost of section 179 property placed in service exceeds $2 Million.

The new permanent Section 179 expensing limit allows a business to take a current year deduction of the full purchase amount up to $500,000 for assets under $2 Million.

Example Savings*

Original Equipment Cost:                  $500,000

New Potential Tax Savings:               $175,000

Final Equipment Cost:                       $325,000

Cash Savings on

Equipment Purchase:                        $175,000

*Assuming a 35% tax qualifying purchase

This information does not constitute tax advice, please check with your tax advisor on how this applies to your business.