Protecting Americans from Tax Hikes (PATH) Act enacted in December 2015 provides tax incentives for machinery.
As a machinery suplier, we talk about different options for our customers, now the IRS is expanding Section 179. Your bussiness can now take advantage of it and keep these incentives available for you. The IRS Section 179 deduction might be the most profitable decision you make in 2016 and beyond.
There are different options but here is a an overview of Section 179
50% bonus depreciation extended through 2017 - 1st Year Bonus Depreciation of 50%
Section 179 Expensing made permanent - Increased Expensing Limit
The new changes to the Section 179 deduction is good on new and used equipment. This equipment must be financed/purchased and put into used by the end of the day (12/31/2016). This another great reason to get machinery during this year.
Some Limitations of IRS Section 179:
1. 2016 Deduction Limit = $500,000
2. 2016 Spending Cap on Equipment Purchases = $2,000,000
3. Bonus Depreciation: 50% for 2016
Please note that IRS SECTION 179 can change year-to-year, that said be sure to take advantage of this more-than-generous tax code while it is available in our inventory
Here is an example calculation of how Section 179 works
- Cost of Machine - $650,000
- Section 179 Deduction - $500,000
- 50% Bonus Depreciation - $75,000
- Standard 1 year depreciation - $15,000
- Total 1st year deduction - $590,000
- Cash Savings - $206,000
- Machine cost after tax - $443,500
All businesses that purchase, finance, and/lease less than $2,000,000 in new or used business equipment during 2016 should qualify for the Secion 179 Deduction.
The deduction decreases on a dollar for dollar scale after that, making Secion 179 a deduction specifically for small and medium-sized businesses.
Equipment must be used for more than 50% of the time to qualify for the Section 179.
We hope this gives you a good a idea what to expect when you jump into upgrading or adding equipment to your business. Check out our website for complete listing of all the machinery available for this incentive or call us at 312-226-4150!!
Please discuss with your tax advisor to understand the specific impact in your business.
For more information contact us.