Well, it’s that time of year again when business is starting to slow down, allowing owners a chance to catch their breath and prepare for the new year. Among other things, this means buying and installing equipment or software that will help improve productivity in the coming year. If it is at all possible to order and install software or equipment before the end of the year, then business owners can enjoy the benefits of accelerated depreciation allowed by the Section 179 tax deduction.

Small and medium business owners can benefit the most from Section 179. It really encourages them to invest in new (or used) equipment or software, because it allows for accelerated depreciation, which maximizes the reduction of tax liability in the current year vs. spreading it out over a number of future years. As everyone knows, an extra dollar earned today is preferred to a dollar earned tomorrow.

The deduction was really powerful when it first came out in 2010, and it stayed that way until the beginning of 2014, when it was announced that it would be reduced to $25,000. Then in the last few weeks of 2014, Congress decided to reinstate it to $500,000.

Talk about being a day late and a dollar short — or in this case, $475,000 short.

Waiting until the tax year is just about ready to expire really makes the increased deduction a moot point, since many of these buying decisions take some time to evaluate followed by a lengthy lead time to build the equipment, ship it and install it. Therefore, last-minute purchases of pre-owned equipment, which is readily available and can ship immediately, may account for many of the Section 179 deductions.

So for 2015, the Section 179 deduction was once again reduced to $25,000 — and once again we’re waiting to see if Congress will re-instate it to $500,000 before the year ends. A petition to re-instate the deduction to $500,000 for tax year 2015 was signed by more than 13,000 business owners and concerned citizens. But once again, Congress is waiting until the year is almost over to do anything, so it considerably reduces the impact of the program.

But even if a year-end tax-deduction boost to $500,000 does not occur, for relatively smaller purchases (those under $200,000), it is still a good idea to complete your purchase and installation of equipment or software before the end of the year. And once again, Crest Capital offers a Section 179 tax deduction calculator that can show you both your tax savings and net cost of the equipment or software after the tax savings are factored into the equation.

So, will Congress come through and once again raise the maximum deduction to $500,000?

What’s your guess?

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