Section 179 Tax Deduction
For the 2016 tax year, the Section 179 Tax Deduction Limit has been raised back to $500,000, the increased level in effect in 2013 and is not reduced until the cost of section 179 property placed in service exceeds $2 Million.
Understanding The Section 179 Deduction. Click this link to see how Section 179 can benefit your business in 2016.
What you should know:
- 2016 is a great year to buy and save on used machinery!
- 2016 Expense Deduction Limit has been raised to $500,000
- 2016 Limit on Capital Purchases = $2 Million
Section 179 Threshold for total of equipment & software that can be purchased has increased to $2 Million (threshold would have been only $500,000 prior to the new legislation).
- 2016 Bonus Depreciation = 50%
The new law allows 50% “Bonus Depreciation” on qualified assets placed in service during 2013 and 2014.
- Section 179 Deduction applies to most new and used capital equipment, and also includes certain software.
- Bonus Depreciation only applies to new equipment (no used equipment, no software)
When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation – unless the business has no taxable profit in the given tax year.
|Original Equipment Cost:||$500,000|
|2016 Potential Tax Savings:||$175,000|
|Final Equipment Cost:||$325,000|
|Cash Savings on|
*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.