The American Recovery and Reinvestment Act extends a 50% bonus depreciation allowance for new machine tools and other equipment ordered and placed in service during 2009. Firms should also be aware of an increased Section 179 expense allowance for small business equipment purchases.

The first-year 50% bonus depreciation allows firms to write off an additional 50% of the cost of new equipment purchased and placed into service in 2009. Qualifying firms can receive the 50% bonus depreciation if the new equipment purchased has a recovery period of 10 years or more, takes more than one year to produce, and costs more than $1 million. Provided that these criteria are met, firms are allowed until the end of 2009 to place the equipment into service.
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