Tax

The Ups and Downs of Section 179 Expensing Limitations

Posted by AICPA 2/26/10

The Economic Stimulus Act of 2008 included a temporary increase of Section 179 expensing to the level of $250,000. This limitation represents the highest that this provision has ever been but it was only in effect for 2008. With the need for economic stimulus still critical in early 2009, The American Recovery and Reinvestment Act (ARRA) of 2009 continued the Section 179 expensing limitation at $250,000 for investments in qualifying property made in 2009.

In 2010 the Section 179 limitation returned to the previous temporary level of $125,000. However, both the House and Senate in separate bills have voted to continue the $250,000 limit for 2010, probably retroactive to January 1st although legislation has yet to be signed by the President.

In working with your clients and assisting them in planning for future asset purchases it is not too soon to be aware of the limits in 2011. The expensing limit will be impacted by the expiration of the 2001 Economic Growth and Tax Relief Reconciliation Act of 2001. This law enacted under President Bush, would cause the expensing limitation to return to its permanent limit of $25,000, unless Congress acts to change it.

Section 179 Expensing Limitations Summary

Calendar Year	Limitation
2009	$250,000
2010 (as of 2/26/10)	$125,000
2011	$25,000