New PATH Act: Increased Section 179 Incentives for Technology Purchases Before Year End

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Thanks to Section 179 of the IRS tax code, businesses have had incentive to acquire capital equipment (including hardware and software) before December 31, 2015. Now, with the passing of “Protecting Americans from Tax Hikes Act of 2015” (PATH Act), the Section 179 deduction limit has been expanded to $500,000!

Under Section 179 of the IRS Tax Code, businesses can deduct the full purchase price of financed or leased equipment and qualifying software for the current tax year. As long as the equipment is within the dollar limits of Section 179, it can be counted in the tax year that the deduction is made. Here is a summary of the expanded deduction limit and PATH Act:

Section 179 will be permanent at the $500,000 level. Businesses exceeding a total of $2 million of purchases in qualifying equipment will have the Section 179 deduction phase-out dollar-for-dollar and completely eliminated above $2.5 million. Additionally, the Section 179 cap will be indexed to inflation in $10,000 increments in future years.

50% Bonus Depreciation will be extended through 2019. Businesses of all sizes will be able to depreciate 50 percent of the cost of equipment acquired and put in service during 2015, 2016 and 2017. Then bonus depreciation will phase down to 40 percent in 2018 and 30 percent in 2019.

Section 179 can provide you with significant tax relief for this 2015 tax year, but equipment and software must be financed and in place by midnight December 31, 2015.

Use this 2015 Section 179 Calculator (just updated for the new PATH Act) to see how much the newly expanded Section 179 tax deduction can save your company