WHAT IS SECTION 179 AND BONUS DEPRECIATION?

Section 179 and Bonus Depreciation allow business to accelerate the depreciation of qualified equipment against their taxable income. 

WHO CAN USE SECTION 179?

Section 179 is a true small to medium business tax deduction.  The Section 179 Deduction is currently $1,00,000. The deduction is unaffected until $2,500,000 in equipment purchases are reached (where it then decreases on a dollar for dollar basis.) This means, at current limits, if a business buys $1,000,000 worth of equipment, their Section 179 deduction is reduced to zero. 

WHAT ABOUT BONUS DEPRECIATION?

Bonus depreciation allows for 100% depreciation of qualified equipment.

HOW DO THEY AFFECT MY TAXES?

Here’s an example :

 Equipment Cost:                                                      $150,000
 

1st Year Section 179 Write Off:                              $150,000
 

Bonus Depreciation :                                               $     0
 

Total 1st Year Deduction:                                       $ 150,000
 

Assuming Tax Rate of 35%:                                        x  35%

 

Estimated Tax Savings:                                             $52,500