IRS releases inflation adjustment for Section 179

Tax Hot Topics: Section 179 inflation adjustmentThe IRS announced (Rev. Proc. 2016-14) updated 2016 inflation adjustment for items affected by the Protecting Americans from Tax Hikes (PATH) Act of 2015.

The IRS typically releases inflation adjustments in October, but the PATH Act’s enactment in December changed several provisions that require new adjustments. (See Tax Flash 2015-06 for a full list of the October inflation adjustments.)

The PATH Act permanently set the Section 179 expensing limit at $500,000 and the start of the phase-out threshold at $2 million, but indexed these figures for inflation starting in 2016. Rev. Proc. 2016 provides that the Section 179 expensing limit will remain $500,000 for 2016, but the phase-out threshold will increase to $2.01 million. The qualified fringe benefit for transit or a commuter highway vehicle was retroactively increased from $130 to $250 for 2015 and increases to $255 in 2016. The above-the-line deduction for qualified teaching expenses was also made permanent and indexed for inflation, but will remain at $250 in 2016.
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