If you’re thinking about pushing your buying decisions into 2018, consider the benefits of receiving this year’s bonus tax depreciation if you purchase a truck before year-end.
Recent law changes include provisions for extending and eventually phasing out bonus depreciation through 2019. These changes also made the increased spending limit and phase-out threshold under Section 179 of the tax code permanent. Provisions were effective beginning Jan. 1, 2015, and replace/extend the prior provisions that expired on Dec. 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%
How It Works
When your business typically purchases certain equipment items, it can write those items off a little at a time through the depreciation. For example, if your company spends $50,000 on a machine, it gets to write off $10,000 a year for five years. Section 179 helps motivate the American economy by allowing business owners to write off the entire equipment purchase price for the year they buy it.
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 $2 million of purchases in qualifying equipment have the Section 179 deduction phased out dollar-for-dollar with complete phase out at $2.5 million. 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 adviser.