On Dec. 17th, The U.S. House of Representatives passed legislation that would make permanent the Section 179 tax deduction allowing for qualified business purchases up to the new $500,000 limit. The deduction would be available for businesses that make up to $2 million in purchases of equipment and would phase out above that amount until reaching $2.5 million, where it would disappear completely. The deduction will also be indexed to inflation at $10,000 increments for future years.
As it stands now, the Section 179 deduction limit is only $25,000 and the spending cap on purchases is only at $200,000.
The legislation also includes provisions for bonus depreciation through 2019. For 2015-2017, bonus depreciation will be set at 50%, in 2018, it will fall to 40%. And in 2019 it will fall again to 30%.
The U.S. Senate is expected to pass the measure and the White House has indicated that the President will sign the measure.
To take advantage of this tax benefit this year means that qualified business purchases, like construction equipment or even business software must be purchased and put into use before midnight on December 31st.
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