Included in the $1.1 trillion spending bill recently passed by Congress, the section 179 deduction has been raised to $500,000.
Signed by President Obama on Dec. 18, the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) permanently sets the Section 179 cap at $500,000. The Act states that the Section 179 deduction shall not exceed $500,000.
This tax provision allows businesses to deduct the cost of certain new and used property, including certain motor vehicles placed into service within the tax year.
The deduction is limited to small and midsize companies. Businesses exceeding a total of $2 million of purchases in qualifying equipment will have the Section 179 deduction phase-out dollar-for-dollar. And the deduction is completely eliminated for companies that spend more than $2.5 million per year.
General Motors is one of many businesses that support the section 179 deduction. A finance and accounting group circulated the Section179.org petition earlier this year. It requested that Congress reinstate the deduction at $500,000 because it could increase capital spending, and therefore increase economic growth and job creation, according to Section179.org.
A company’s equipment and software must be financed and in place by midnight Dec. 31, 2015, in order to receive the tax deduction for the 2015 tax year.
Originally posted on Work Truck Online