Recent law changes include provisions for extending and eventually phasing out bonus depreciation through 2019, and made permanent the increased spending limit and phase-out threshold under Sec 179 of the tax code. These provisions were effective beginning January 1, 2015 and replace/extend the prior provisions that expired on December 31, 2014.
Section 168(k) Bonus Depreciation
The PATH Act extends bonus depreciation for qualified property placed in service for the calendar years 2015 – 2019, subject to a phase-out schedule. The rates for each year are as follows:
| 2015 50% | | 2016 50% | | 2017 50% | | 2018 40% |
| 2019 30% |
Section 179 Deduction
The PATH Act makes permanent the increased spending limit and phase-out threshold under Sec 179. This 100% deduction limit is now set at $500,000 of total annual qualified expenditures. Businesses that exceed a total of $2M of purchases in qualifying equipment have the Section 179 deduction phased out dollar-for-dollar with complete phase out at $2.5M. Under previous law, these limits were set at $25,000 and $200,000.
To learn more information about the laws or to calculate potential savings visit: section179.org
This summary was written to support the promotion or marketing of the matter addressed above, and is not tax advice provided by Murphy-Hoffman Company or MHC Kenworth. The taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor