Bonus Depreciation extended, Section 179 Expensing made permanent.
With the productivity and profitability of U.S. manufacturers in mind, the government encourages you to take advantage of two key tax incentives regarding machine purchases.* A first-year bonus depreciation allows for a 50 percent bonus deduction, while the now permanent Section 179 provides equipment expensing up to $500,000.
50% Bonus Depreciation
The 50 percent bonus depreciation deduction applies to any dollar amount of qualified capital expenditures.
Used machine purchases do not qualify for the deduction.
Section 179 Deduction
The Section 179 Expensing limit is now permanent at $500,000.
A dollar-for-dollar phase out of the deduction begins once qualified purchases exceed $2,010,000.
Example of first-year depreciation calculation
$500,000 machine purchase/qualified expenditures
Section 179 Expensing $500,000
Total depreciation $500,000
Tax savings at 35% Tax Rate $175,000
$1,000,000 machine purchase/qualified expenditures
Section 179 Expensing $500,000
50% depreciation $250,000
14% regular depreciation $35,000
Total depreciation $785,000
Tax savings at 35% Tax Rate $274,750
*Please consult with your tax professional regarding these incentives.
