What are the Section 179 Deduction limits for 2011 and 2012?
A major tax incentive for small businesses is the Section 179 expense deduction. Under the current tax law, the Section 179 Limit is $500,000 in 2011.
What is the impact of the section 179 Deduction?
The section 179 deduction allows businesses to deduct upto $500,000 for equipment purchased or financed in 2011, (irrespective of whether or not it is new or used). But, there is a limit on equipment purchases of $2 Million Dollars (up from $800k previously).
This expense clearly represents a much larger amount of equipment expense and avoids depreciation expenses over many years, with the result of significantly lower taxes in the current tax year, and contributing to increased business cashflow in the short term due to tax savings.
Unfortunately, the section 179 limit will return to $125,000 in 2012.