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The PATH Act: Bonus Depreciation vs. Section 179 Expensing

March 07, 2016

The PATH Act of 2015 extends the 50% bonus depreciation break through 2017—Will this or Section 179 expensing hold more value for you?

Under the Protecting Americans from Tax Hikes (PATH) Act of 2015, there are opportunities for taxpayers to take an additional depreciation deduction in the year a qualified piece of property is placed in service, called bonus depreciation. The PATH Act extends this 50% break through 2017, but it is up to taxpayers to decide if this deduction or Section 179 expensing will provide the greatest benefit.

So, what is more valuable? Section 179 Expensing or Bonus Depreciation?

Read our recent blog: “How does the PATH Act Affect Section 179 Expensing?” to learn more about recent changes to this tax break, but essentially Section 179 expensing allows businesses to immediately expense the cost of qualified property in the year it is placed in service.

Deciding whether this or bonus depreciation is a better option for you depends on:

  • If your property acquisition expenses are eligible for both breaks- In this case, Section 179 is the better option because it allows you to deduct 100% of the expense, although Section 179 depreciation cannot create a net operating loss.
  • If your property acquisitions for the year exceed the Section 179 threshold- In this case, Bonus depreciation might provide a larger tax benefit.

Want to learn more about bonus depreciation and Section 179 Expensing? Download our eBook “The PATH Act: What all Taxpayers Need to Know”.

Questions? Contact any member of our Tax Services Team.

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