The Section 179 Deduction allows you to deduct from your gross income the full purchase price of qualifying equipment purchased or financed during the tax year—as opposed to writing it off through depreciation. Section 179 was significantly enhanced by the Economic Stimulus Act of 2008, and those enhancements were extended an additional year by the American Recovery and Reinvestment Act of 2009, giving businesses an incentive to invest in themselves by purchasing or leasing new equipment.
The Economic Stimulus Act specifically impacted the dollar limits of Section 179:
• 2007 Deduction: $125,000
• 2008/2009 Deduction: $250,000
• 2007 Total Amount of Equipment Purchased: $500,000
• 2008/2009 Total Amount of Equipment Purchased: $800,000
(Deduction decreases dollar for dollar after the limit is reached.)
In addition, businesses that exceed the $250,000 deduction limit in 2009 can take a bonus depreciation of 50 percent on the amount that exceeds the limit and can then take normal depreciation on the rest.
All businesses that purchase or finance less than $800,000 in business equipment should qualify for the Section 179 Deduction, provided the equipment purchased is placed into service between January 1, 2009 and December 31, 2009.
For more information and a list of qualifying equipment, visit www.section179.org.