Congress Extends Special Depreciation Deductions

Bought an asset in 2015, or thinking of buying an asset in 2016 for your business? We’ve got good news for your taxes. In December Congress retroactively reinstated and extended two popular deductions to help reduce 2015 and future taxable income. Bonus depreciation was reinstated at 50% for assets acquired and put in service during 2015, 2016, and 2017, with a phase out period through 2019. The Section 179 deduction was raised to $500,000 for 2015 and indexed for inflation starting in 2016. Which deduction you can use will depend on your personal set of circumstances.

Section 179 Deduction

 20152016 and beyond
Dollar Limit$   500,000$   500,000*
Phaseout Threshold$ 2,000,000$ 2,000,000*
Limit on Certain Types of Building Improvements and Buildings$   250,000$   500,000*
*Limit and threshold amounts are indexed for inflation beginning in 2016


Code Sec. 179 may provide a 100% first-year write-off of certain new and used business property. In order for businesses to claim a Sec. 179 deduction, the business must have taxable income. This election is available on an asset-by-asset basis. For the 2015 tax year, the dollar limit is $500,000 and the limit before phase-out begins at $2,000,000. As a result, a taxpayer may not claim Sec. 179 when the total cost of all qualified property placed in service in 2015 equals or exceeds $2,500,000.

Bonus Depreciation

2015 – 201720182019
% of bonus available50%40%30%


Bonus depreciation applies to new (not used) tangible property with a depreciation period of not more than 20 years. Examples of qualified property include: machinery, equipment, most computer software, certain leasehold building improvements, non-building land improvements, and other tangible personal property. For property placed in service in 2015, the law provides for 50% Bonus depreciation. After 50% Bonus depreciation is applied, the remaining cost of the asset is depreciated under regular depreciation rules.

Keep these two useful provisions in mind when it comes time to prepare your tax return this year. Please contact Sol Schwartz & Associates P.C. for more information and any questions for your specific business.