What is the threshold that triggers the phase-out of Section 179 expensing?

The threshold that triggers the phase-out of Section 179 expensing is indeed related to the total qualifying property placed in service exceeding a specific dollar amount established by the IRS. Under Section 179, businesses can choose to expense the cost of certain qualifying property rather than capitalizing and depreciating it over several years. However, there is a limit to this benefit.

Once the total amount of qualifying property exceeds the dollar threshold set by the IRS for that tax year, the deduction begins to phase out. This means that for every dollar of qualifying property placed in service above the threshold, the Section 179 expense deduction is reduced dollar-for-dollar until it is completely phased out for amounts well above the limit.

This ensures that the benefit is targeted towards smaller businesses that invest in qualifying equipment or property, while larger investments are phased out to prevent excessive deductions from larger, potentially more consolidated businesses.