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Time to go shopping: Section 179 expands deduction limit to $500,000

The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) was passed by both the House and Senate and signed into law on Dec. 18, 2015. Consequently, as of Jan. 1, 2016, manufacturers get yet another gift in the form of the expansion of Section 179 deduction limit to $500,000, which is permanent at that level until further notice. The provision extends bonus depreciation for property acquired and placed in service from 2015 through 2019 (with an additional year for certain property with a longer production period).

Businesses of all sizes will be able to depreciate 50% (bonus depreciation) of the cost of equipment put in service during the 2015, 2016 and 2017 calendar years. That phases down to 40% in 2018, and 30% in 2019. The provision continues to allow taxpayers to elect to accelerate the use of alternative minimum tax (AMT) credits in lieu of bonus depreciation under special rules for property placed in service during 2015. The provision modifies the AMT rules beginning in 2016 by increasing the amount of unused AMT credits that may be claimed in lieu of bonus depreciation. Equipment and software must be financed and in place by midnight December 31, 2016, to qualify.

To get more detailed information and to access the 2016 Section 179 calculator to see how much the Section 179 tax deduction can save your company, visit www.section179.org. Check with your accountant to see how this can benefit your company. This might be a good year to purchase the new machinery and equipment you need.

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