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Tax Benefits for Business Assets under Section 179: Key Points & Limits

Learn about the tax advantages offered by Section 179 expensing election for business assets including increased deduction limits and income restrictions. Get insights on investment thresholds and Gulf Opportunity Zone bonuses.

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Tax Benefits for Business Assets under Section 179: Key Points & Limits

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  1. Section 179 Expensing Election to expense certain depreciable business assets

  2. Sec. 179 Increased Amounts Extended • TIPRA of 2005 extended $100,000 maximum expenditure limit for 2 more years • Returns to $25,000 for tax years beginning after 2009 • Inflation adjustments • 2005 was $105,000 • 2006 is $108,000 W L Hoover, Purdue University

  3. Sec. 179 Increased Amounts Extended • TIPRA also extended $400,000 investment limit for 2 years • Returns to $200,000 for tax years beginning after 2009 • Inflation adjustment • 2005 limit was $420,000 • 2006 limit is $430,000 W L Hoover, Purdue University

  4. Sec. 179 Income Limitation • Deduction limited to taxpayer’s taxable income from active conduct of trade or business • Taxable income from trade or business includes • Sec. 1231 net gains W L Hoover, Purdue University

  5. Sec. 179 Gulf Opportunity Zone Increases • Expenditure limit increased to $200,000 • Investment limit increased to $1 million • $1.03 million in 2006 • Placed in service on or after August 28, 2005 and before January 1, 2008 W L Hoover, Purdue University

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