The 2008 Economic Stimulus Package increased the limits on expensing. Under the new law businesses that spend less than $800,000 a year on qualified equipment, can write off up to $250,000 in 2008. The rules are designed for small companies, so the $250,000 deduction phases out when a business purchases more than $800,000 in one year (Companies cannot write off more than their taxable income).

 

The tax code that covers expensing is Section 179. The code states: that a business can choose to recover all or part of the cost of certain qualifying property by deducting it in the year it is placed in service. Businesses can elect the section 179 deduction instead of recovering the cost by taking depreciation deductions."

 

Two independent tax accountants verified that purchasers of used machinery may take advantage of this expensing provision.

 

In order to take advantage of the 2008 tax incentives, business equipment must be put in use by year-end. Unless Congress extends this, the Tax Code 179 deduction will go back to $125,000 with the limit of $500,000 in 2009.