Spending Bill Includes PCCA-supported Tax Breaks
News reports out of Washington, D.C., today [December 18, 2015] say that the House and Senate have overwhelmingly approved a package of spending measures and tax breaks that includes higher Section 179 expensing levels for equipment purchases and a reinstatement of the 50 percent bonus depreciation. President Obama is expected to sign the bill into law. PCCA supported both provisions in a November letter to congressional leaders.
Section 179 of the federal tax code allows businesses to deduct the full purchase price of qualified equipment purchased or financed during a given tax year from its gross income. The provision was created as an incentive to encourage businesses to buy equipment and invest in themselves.
The bill passed today permanently extends the small business expensing limitation and phase-out amounts in effect from 2010 to 2014 ($500,000 and $2 million, respectively). It also modifies the expensing limitation by indexing both the $500,000 and $2 million limits for inflation beginning in 2016.
Bonus depreciation is useful to very large businesses spending more than the Section 179 spending cap (currently $200,000) on new capital equipment. The main difference is that both new and used equipment qualify for the Section 179 deduction, while bonus depreciation covers new equipment only.
The legislation passed today extends bonus depreciation for property acquired and placed in service during 2015 through 2019 (with an additional year for certain property with a longer production period). The bonus depreciation percentage is 50 percent for property placed in service during 2015, 2016 and 2017 and phases down, with 40 percent in 2018, and 30 percent in 2019.
News reports say the bill also includes extensions of the wind and solar Investment Tax Credits, which is good news to PCCA members working in those markets.