New 2016 Annual Deduction Limit Increased to $500,000

Section 179 – New PATH Act Benefits Small & Medium Businesses

Significant Tax Savings Available*

The new law was signed into effect in mid-December. *Obviously, confirm with your tax advisor the benefits to your situation.

It provides a $500,000 permanent increase in 2016 to the Section 179 Allowance for Deduction, and provides additional increases each year for inflation.

This means YOUR business purchases of equipment* via cash or finance agreements, including bargain option leases may write off, the entire cost of the purchase up to $500,000.

Once total equipment purchases exceed $2,000,000- the Section 179 allowed amount is reduced dollar for dollar.

Section 179 Example:

Equipment Purchased: $80,000
Section 179 Deduction Taken: $80,000
Company Tax Bracket: 35%
Tax Shield Savings: $28,000
True, After Tax Cost: $52,000

*Equipment Allowed

The list below is meant as a general guide to equipment that may be expensed under Section 179.

  • Machinery
  • Computer Systems and Networks
  • Telephone Systems
  • Healthcare and Medical Equipment
  • Patient Flow Communications & Nurse Call
  • Small buses
  • Security Systems
  • Off the Shelf Software
  • Office Furniture and FFE

Download a PDF copy of this article here.

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