Companies in the United States taking delivery on eligible equipment purchases before the end of 2015 have the opportunity to take advantage of significant tax savings. These savings come as part of recent legislation passed by the House and Senate that extends and enhances certain tax credits.

Under the section 179 legislation passed by Congress, 50% of new equipment’s depreciation can be deducted from this year’s tax returns. This can translate into big tax breaks for companies able to make purchases and put them into service before the year’s end.  In addition, the same breaks can be applied through 2017. Tax deductions are set to be reduced to 40% and 30% in the following years. Continuing depreciation deductions can then be used throughout the life cycle of the equipment.

In addition to the late breaking extension of this tax incentive, caps on total limits now stand at $500,000, compared to levels in 2014 that were reduced to $25,000. Businesses with higher spending up to $2 million will see a reduction in their available deduction, while purchases above the $2.5 million remain ineligible for depreciation credit. What is more, the $500,000 limit is now permanent under the most recent section 179 legislation.

This legislation removes lingering doubts about new equipment purchases and should allow businesses to more effectively plan their purchases at the end of this year and over the next five years. It is part of a much larger act, titled the “Protecting Americans from Tax Hikes Act of 2015,” also known as the PATH Act. While section 179 deals specifically with equipment purchases, when combined with other sections of the PATH Act it could add up to big tax savings for businesses of all sizes.

Similar legislation was passed at the end of 2014 and signed into law by President Obama shortly afterwards.