What is Section 179?
Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price* of qualifying equipment and/or software purchased or financed during the tax year. What this means is…that if you buy (or lease) a piece of qualifying equipment, you can deduct the full purchase* price from your company’s gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest back into themselves.
*2015 Deduction Limit = $25,000
This deduction is good on new and used equipment, as well as off-the-shelf software. This limit is only good for 2015, and the equipment must be financed/purchased and put into service by the end of the day, 12/31/2015.
2015 Spending Cap on equipment purchases = $200,000
This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis. This spending cap makes Section 179 a true “small business tax incentive”.
Bonus Depreciation: not available in 2015
In prior years, Bonus Depreciation would be taken after the Section 179 Spending Cap is reached. Note: Bonus Depreciation was available for new equipment only; in 2015, Bonus Depreciation is not available at all.