Tax Law and News IRS Raises Tangible Property Expensing Threshold From $500 to $2,500 Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Mike D'Avolio, CPA, JD Modified Mar 6, 2019 1 min read To the delight of small businesses and the accounting industry, the Internal Revenue Service has raised the tangible property expensing threshold from $500 to $2,500, starting in tax year 2016. However, the IRS will provide audit protection and not challenge the use of the new, elevated $2,500 threshold by eligible businesses in tax years before 2016. By raising the safe harbor threshold for deducting certain capital items to $2,500, the IRS simplifies the paperwork and recordkeeping requirements for many small businesses. This change impacts small businesses that don’t maintain audited financial statements, and applies to amounts to acquire, produce and improve tangible property that would otherwise need to be capitalized or depreciated over a period of years. Such expenditures need to be substantiated by an invoice. This is a much-welcomed change, as the cost of many commonly expensed items, such as cell phones, tablets, and machinery and equipment, typically surpass the $500 level. Just like before this most recent change, businesses can still claim otherwise deductible repair and maintenance costs, even above the $2,500 threshold. For businesses with audited financial statements, the de minimis or small dollar threshold remains at $5,000. For more information, click here. Previous Post IRS, States and Tax Prep Companies Launch Security Awareness Campaign… Next Post What Your Clients Need to Know about 1095-A, B and… Written by Mike D'Avolio, CPA, JD Mike D’Avolio, CPA, JD, is a tax law specialist for Intuit® ProConnect™ Group, where he has worked since 1987. He monitors legislative and regulatory activity, serves as a government liaison, circulates information to employees and customers, analyzes and tests software, trains employees and customers, and serves as a public relations representative. More from Mike D'Avolio, CPA, JD Comments are closed. Browse Related Articles Tax Law and News Lightening the Compliance Burden Tax Law and News What You Need to Know for Tax Year 2015 Tax Law and News Business year-end planning tips Tax Law and News 2014 Filing Requirements – Tangible Property Regu… Tax Law and News Tax Law Changes for TY 2016 – Part 2 Tax Law and News IRS Releases Publication 535 With Details Around Qualif… Tax Law and News Advice for Business Clients Closing Out Tax Year 2019 Tax Law and News What You Need to Know About Repair Regulations Tax Law and News Recent Tax-Favored Treatment for Small Business Tax Law and News E-filing mandate for 10+ info returns explained