Section 179 – Expense deduction increased to $125, 000 for 2012

If you’re contemplating purchasing new software in 2012 you should be aware of Section 179 of the tax code. Computer, printers and off the shelf software quality and businesses can deduct 100% of the purchase price from their gross income up to the limit of $125,000.

The Section 179 deduction limit for 2010 and 2011 is $500,000 with a $2 million overall property value limit. This was scheduled to go down in 2012 to $25,000 for the deduction limit and $200,000 for the overall property value limit. Under the new tax laws passed in December 2010, the Section 179 deduction limit for 2012 will be $125,000 and the overall property value limit for 2012 will be $500,000.

Before deciding if it makes sense for you make the purchase in 2012 you should talk to your accountant. Depending on your tax bracket the government could potentially underwriting 20% -30% of the purchase. Food for thought.