The new law extends the current favorable Section 179 deduction rules through the 2010 tax year and makes some favorable changes as well:
Maximum Deduction Increased to $125,000. For tax years beginning in 2007 the maximum Section 179 deduction is generally increased to $125,000 (up from the $112,000 figure that applied before the new law.) For tax years 2008 through 2010, the $125,000 amount will be indexed for inflation.
Liberalized Phase-Out Rules. If a taxpayer adds qualifying property (typically equipment and software) in excess of the annual threshold, the maximum Section 179 deduction for the year gets reduced (phased out). For tax years beginning in 2077, the phase-out threshold is generally increased to $500,000 of qualifying property (up from the $450,000 threshold that applied before the law). The $500,000 amount will be indexed for inflation for tax years 2008 through 2010.
Most Software Qualifies for the Deduction. The provision that allows Section 179 deductions for the cost of most off-the-shelf software products, such as PatientNOW, is extended through the 2010 tax year.
Favorable Amended Return Rules Extended. A provision that allows Section 179 elections to be changed or revoked on amended returns is extended through tax years beginning in 2010.
Should you decide to purchase this year, you will be able to take advantage of this tax credit regardless of whether you purchase or finance. The Section 179 tax credit will effectively reduce your out-of-pocket expense by approximately 35%.
Section 179 Tax Credit is in addition to the $44,000 physician stimulus reimbursement, 2% e-prescribing reimbursement and PQRI reimbursement.