The “Protecting Americans from Tax Hikes Act of 2015” (PATH Act) has been passed by both the House and Senate and will be signed into law – expanding the Section 179 deduction limit to $500,000. Section 179 will be permanent at the $500,000 level. Businesses with more than $2 million of purchases in qualifying equipment will have the Section 179 deduction phase-out dollar-for-dollar and completely eliminated above $2.5 million.
50% Bonus Depreciation will be extended through 2019. Businesses of all sizes will be able to depreciate 50 percent of the cost of equipment acquired and put in service during 2015, 2016 and 2017. Then bonus depreciation will phase down to 40 percent in 2018 and 30 percent in 2019.
Section 179 works for most leased or purchased equipment. Since both methods of payment are 100% deductible, the biggest difference is in out-of-pocket expense.
When you purchase, you pay the entire amount for the equipment out of pocket, and then deduct the purchase price on your taxes.
When you lease, you pay only the monthly lease payments out of pocket, and still get to deduct the full purchase price on your taxes. That is a huge difference that makes good financial sense.
Please contact your tax professional to find out if the 179 deduction would benefit your business. Comtel technology experts are standing by to help you put better technology to work for your business.