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2016 IRS Section 179 Deduction Benefits

2016 Section 179 Deductions

The deduction limits have changed for all 2016 qualifying equipment!


The deduction limit for Section 179 is now $500,000.

  • This means that if your customers buy (or finance) a piece of Equipment, they can deduct the Full Purchase Price (up to$500,000) from their gross income.
  • The old limit was $25,000.

The 2016 Section 179 deduction threshold for total amount of equipment that can be purchased is now $2,000,000.

  • This means that customers can purchase more equipment and still have the benefit of the Section 179 deduction.
  • The old limit was $200,000.

50% bonus depreciation has been reinstated for the tax year 2016 and extended through 2019.

  • For equipment purchases over the Section 179 deduction of $500,000, your customers can deduct an additional 50% of the amount over $500,000 in addition to their standard depreciation deduction. This applies to equipment acquired and put into service during 2016 and 2017. Then bonus depreciation will phase down to 40% in 2018 and 30% in 2019.
  • The old limit was $0.

Please Note:
Section 179 Deduction is available for most new and used capital equipment, and also includes certain software. Bonus Depreciation can be taken on new equipment only (no used equipment, no software). When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation – unless the business has no taxable profit in the given tax year.

Successful businesses take advantage of legal tax incentives to help lower their operating costs. The Section 179 Deduction is a tax incentive that is easy to use, and gives businesses an incentive to invest in themselves by adding capital equipment. In short, taking advantage of the Section 179 Deduction will help your business keep more capital, while also getting needed equipment, vehicles, and software.