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Important Update - Section 179 (2016)


"The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) has been passed by both the House and Senate and signed into law making Section 179 deduction permanent and expanding the limit to $500,000 "

Maximum Section 179 Deduction for 2016: $500,000

Qualifying purchases up to $500,000.00 may be deducted 100% the year it is put into service. Further, this maximum will be increased annually, with the maximum tied to inflation, at $10,000.00 increments.

Bonus Depreciation; Maximum Qualifying Purchases: $2,000,000

Once the maximum Section 179 deduction of $500,000.00 is exceed, bonus depreciation kicks in at 50%, until you reach the maximum qualifying purchases of $2,000,000.00.

Note: The section 170 deduction applies to NEW and USED equipment or software where as the bonus depreciation is only available for NEW equipment.

Example illustrating the potential tax savings with Section 179 Deduction and Bonus Depreciation

Cost of equipment

$150,000.00

1st year write-offs

• Section 179

$150,000.00

• Bonus depreciation*

$0.00

• Balance deducted over 5 years*

$0.00

Total 1st year deduction

$150,000.00

Marginal tax rate assumed 35%**

$52,500.00

Bottom line cost after tax savings

$97,500.00

This example assumes purchases placed in service by 12/31/2016
*50% bonus depeciation after Section 179 deduction
**Tax savings assume a 35% tax rate

What Software Qualifies?
  • Off-the-Shelf Computer
  • Software available for purchase by the general public
  • Not subject to a nonexclusive license
  • Has not been substantially modified
For more information, please email [email protected] or call 877-646-3300.