Section 179 and Bonus Depreciation Amounts for 2012 and 2013
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As part of the fiscal cliff tax deal passed by Congress on January 1, 2013, the Section 179 limit for 2012 was retroactively increased from $128,000 to $500,000. This means that, if, for example, you purchased $250,000 of property that qualifies for Section 179 treatment in 2012, you may deduct the entire amount in 2012, instead of just $128,000. If you purchase more than $2 million of equipment in any one year, then the amount you can deduct is reduced dollar for dollar. The $500,000 Section 179 limit is scheduled to last until the end of 2013. In 2014, the Section 179 limit is scheduled to go to $25,000.
For 2012 and 2013, bonus depreciation is set at 50%--that is, you may deduct 50% of the cost of property that qualifies in a single year. Unlike the case with Section 179, there is no annual dollar limit on bonus depreciation and you need not use the property at least 51% of the time for business.