To cap off 2015 for Congress, both the House of Representatives and the Senate passed the $1.8 trillion Omnibus deal that included spending bills and crucial tax breaks for small businesses.While this deal was full of a wide variety of credits, the Section 179 tax break stands out particularly to small medical practices.
For those unaware of what Section 179 is, it is essentially a tax credit for small business, allowing them to deduct up to $25,000 for purchasing or upgrading new equipment. However, since the passed deal now allows these business, including small medical practices, to expense up to $500,000 in equipment upgrades and purchases made during 2015.
“We applaud the House for passing a package of vital tax provisions that will bring companies predictability and certainty in the tax code as we continue to work toward much needed comprehensive tax reform,” said Bruce Josten, executive vice president for the U.S. Chamber of Commerce.
RELATED: Section 179: What It Means for Your Practice
From our Section 179 post earlier in the week:
Paid-in-full purchases of capital equipment would qualify, of course, but this deduction also considers equipment acquired via non-tax capital leases or Equipment Finance Agreements (EFAs) to qualify. The leasing and EFA options are pretty useful, since it allows you to qualify for the full amount of your deductions for 2015 without actually having to pay the full amount for the equipment within that tax year. Let’s take a look at how these two options work:
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Non-tax Capital Lease: in a non-tax lease, you (or your practice) will be considered the owner of the leased equipment. As a result, it allows you to reduce your taxable income by the amount of depreciation and interest expense.
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EFA: this alternative financing option, you still pay for the equipment monthly. However, your practice is considered the owner of the financed equipment instead of the lender. Combining an EFA with the Section 179 deduction, the amount you deduct will exceed cash layout for 2013.
The bill will now be sent to President Barack Obama and he is expected to sign the bill in the near future.