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Congress Makes Some Equipment Buying Tax Benefits Permanent

Companies looking to continue keeping up with technology improvements by updating their equipment have new help in that approach.

Congress has made a bipartisan move on tax policy that makes some tech, equipment buying tax benefits available for the long term. There is a range of benefits for companies, including making the enhanced version of the Section 179 deduction permanent.

The 2014 Section 179 tax extender was passed in late December 2014 giving companies little time to act on the provision (you have to take possession of the machine to claim the deduction). The same happened in 2015, but with a twist. Section 179 has been past retroactive for 2015 with the $500,000 deduction limit (without the measure the limit was $25,000), but this time the rule has been made permanent.

Congress passed the measure in mid-December, and it was signed into law by President Obama - along with a comprehensive Omnibus spending measure. This is significant for companies. The tax bill is a major compromise that offered a range of benefits for different groups. It’s been attacked by some as welfare for businesses, but each side of the Congressional aisle got many provisions they wanted.

The key is getting some certainty back into the tax code, which is important if you’re running a business for the long haul.

The bill also includes a five-year extension of bonus depreciation for property acquired and put in service during 2015 through 2019, with an added year of certain property with a longer production period. The bonus is 50% for property put in service in 2015, 2016 and 2017. It slides to 40% in 2018 and 30% in 2019.

Talk with your tax adviser before year end to make sure you maximize the tax benefit of any purchases you made in 2015; and review your equipment buying plan for 2016 with an eye toward this now-permanent Section 179 provision.

 

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