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American Taxpayer Relief Act Changes to Section 179

Retroactively effective for tax years beginning in 2012, the new tax act increases the maximum expensing amount under Code Section 179 from $139,000 to $500,000.

Effective for tax years beginning in 2013, the tax act increases the maximum expensing amount under Code Section 179 from $25,000 to $500,000. The tax act also increases the phase-out amount to $2 million.

For tax years beginning after 2013, the maximum expensing amount is scheduled to drop to $25,000.

The retroactive boost for tax years beginning in 2012 amounts to a windfall for eligible taxpayers that placed in service more than $139,000 of eligible property.

The tax act also extended the provision for 2 years, including 2012 and 2013, that up to $250,000 of qualified real property is eligible for expensing under Code Section 179. This includes qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property.

I saw a statement over the weekend that I loved and felt was very accurate. On CNNMoney it said, "The new law makes an already incomprehensible tax system even more incomprehensible."

We will continue to analyze the new tax act and will provide more details next week.

Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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