Section 179 Deduction for Businesses Increased to $500,000

Now here's something that doesn't happen very often, especially lately: The Feds recently passed legislation that actually benefits small and medium businesses. H.R. 5297, known as the "Small Business Jobs and Credit Act of 2010," creates significant benefits for businesses who invest in capital equipment.


The main impact is a significant increase in the Section 179 deduction to $500,000 for 2010. Any company that purchases or leases any capital equipment and puts it into service prior to Dec. 31 of this year can deduct 100 percent of the entire purchase price, up to $500K, in this tax year, rather than depreciating it over multiple years.


This could have a substantial impact. For example, based on a 35 percent tax bracket, a capital purchase or lease of $250,000 could result in a tax savings of $87,500.


The regulation stipulates the type of capital equipment that qualifies, and computer equipment, including servers, network systems, data storage devices, laptops, desktops and related equipment all qualifies under the guidelines. The new regulation is retroactive, meaning any equipment already purchased since Jan. 1, 2010, is included.


Marion K. Jenkins, PhD, FHIMSS, is founder and CEO of QSE Technologies, which provides IT consulting and implementation services for ASCs and other medical facilities nationwide. Learn more about QSE Technologies at www.qsetech.com.

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