Yet again, Congress waited until December to raise the Section 179 limits. But raise it they did, even if it’s late in the year. And they did it with a BANG!
The Protecting Americans from Tax Hikes Act of 2015 raises Section 179’s deduction limit to $500,000, which is a very healthy boost from where it was ($25,000). This means businesses can deduct the full cost of qualifying new and used equipment, up to $500,000 for the 2015 tax year.
Plus, they made this limit permanent. So until further notice, Section 179 is a robust $500,000! I’ve advocated making Section 179 higher, and doing it earlier in the year, so making it permanent is a HUGE step in the right direction.
Here are a few other details:
The cap on all equipment purchases is two million dollars. So if your business purchases more than two million dollars in equipment, the Section 179 deduction you can take decreases on a dollar for dollar basis (this means if you buy $2.5 million worth of equipment, you don’t get a Section 179 deduction. This makes Section 179 a true small and medium business tax deduction.)
The Section 179 cap will be indexed to inflation in 10,000 increments in future years. Great news!
The bonus depreciation will be in effect until 2019. For 2015/16/17, it’s 50%. In 2018, it’s 40%, and in 2019, 30%. Again, this is superb news.
Fletch is a happy dude. This was exactly what small and medium businesses needed.