“The Protecting Americans from Tax Hikes Act of 2015” (PATH Act) was recently passed by Congress. The act is aimed at growing our economy and helping American taxpayers keep more of their hard earned dollars. The bill will help protect Americans and job creators from tax increases and this bill expands the Section 179 expensing limits to $500,000 and $2 million limits (with no limitation on real estate) and these generous rules have been made permanent.
The deduction allows the cost of qualifying new and used depreciable assets (including most software) to be fully written off in the first year and has a $500,000 cap for 2015 (it will be indexed for inflation in future years).
The new law also allows for a 50% first-year bonus depreciation for qualifying new business assets that are placed in service in calendar years 2015-2017. This break along with the Section 179 deduction can lead to big tax savings for small and medium sized businesses. Businesses have less than 10 business days to make a qualified purchase such as software or hardware to take advantage of the tax break for 2015 purchases. Though unlike the restoration of the section last year, it is now a permanent addition.
Qualifying purchases include equipment (machines, etc.) purchased for business use, tangible personal property used in business, business vehicles with a gross vehicle weight in excess of 6,000 lbs., computers, off the shelf software such as Medisoft, Lytec and PrimeSuite by Greenway, office furniture and office equipment.
Section 179 for 2015 expires midnight, 12/31/2015. If you wish to deduct the full price of your equipment from your 2015 taxes to take advantage of the new deduction limits, it must be purchased and put into service by 12/31/15.