Section 179 is still quiet – for now

By | August 6, 2014

Section 179 Still QuietHere we are in the third quarter of 2014, and Section 179 is still sitting where it was at the beginning of the year. Most years, this wouldn’t be news, but in terms of the dollar amount of the tax deduction, Section 179 is fairly low right now. And even though we are in quarter 3, I do not expect it to stay there.

Right now, the limit on the deduction is still $25,000, plus an adjustment for inflation. Last year, it was $500,000. Bummer, right? Well, not necessarily so.

First of all, for many small and medium businesses, a $25,000 deduction is just fine. In fact, a great majority of Section 179 users never even hit that number, so many, many businesses remain unaffected. If you were contemplating buying a $20,000 piece of equipment, the current levels of Section 179 will work just fine for you.

But again, even for larger businesses / purchases where these lower limits are a concern, I say “don’t worry about it”. Every year this has happened, the federal government has swooped in and raised the limit. And yes, it has happened late in the year. In fact, they have even done it retroactively. This last happened in 2013, where they went and raised 2012’s limits. This made many businesses and accountants happy, of course. There’s nothing like getting free money after the fact. And accountants need something to do after April 15th.

So if you need new equipment, don’t put it off trying to predict what will happen with Section 179 this year. Because even if it doesn’t get raised this year, history suggests that if/when 179 gets raised next year, it will be made retroactive. So predicts Fletch.

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