The 2008 Economic Stimulus Act increased the value of Internal Revenue Code Section 179 deduction for equipment purchased and placed into service during the 2008 tax year. If your total equipment purchases do not exceed $800,000 per year, you can expense up to $250,000 of the purchase price potentially allowing you to depreciate up to 100% of the cost in one year.

Section 179 also provides incentives to business owners to invest in qualified equipment or property by allowing companies to deduct additional depreciation of those investments in the first year, in addition to the Standard Depreciation (MACRS) deduction. This increases your tax benefit the first year your equipment is acquired and placed into service.

In addition, the Economic Stimulus Act of 2008 also allows you to depreciate up to 50% of new equipment costs in the first year; plus the percentage of the remaining basis in the equipment that would ordinarily be depreciable under the MACRS deduction. Companies that are eligible for Section 179 can also combine it with the depreciation bonus for even bigger tax savings.

Contact your tax professional today for more details.