Section 179 Increased and Made Permanent

Last week's Omnibus package included good news for farmers and ranchers awaiting news of Section 179 as CliftonAllenLarson Principle and Farm CPA Today blogger Paul Neiffer explains
Neiffer: “The nice thing for farmers is that Section 179 has been made permanent at the $500,000 level indexed to inflation. There is a couple of other minor items — you can actually deduct air conditioning units and furnaces starting next year. But for most of our farmers, if they purchase equipment total equipment costs less than $500,000 —whether it is new or used — they can deduct it on the current year tax return. Also they included a provision on bonus depreciation to make that at the 50 percent level through 2017 — so this year, next year and the year after; 2018 it will be at the 40 percent level; and then in 2019 will be at 30 percent level. So that is also good news for farmers. We have to be careful — if we’re going to have tax reform beginning in either 17 or 18 — since a lot of these provisions have been based permanent it allows Congress to use those to offset some of the savings that they might have with tax reform. However, with Section 179 even with major tax reform they are calling for that to be made permanent at the $1 million level versus the current $500,000 level. So bottomline it is pretty favorable for most of our farmers as far as being able to deduct equipment purchases.”