The IRS has increased the de minimis safe harbor from $500 to $2,500 for taxpayers that don’t maintain an applicable financial statement. (IRS notice 2015-82)

The de minimis safe harbor was intended as an administrative convenience to allow taxpayers to deduct small dollar expenditures for the acquisition or production of new property or for the improvement of existing property, which otherwise must be capitalized under Code Section 263(a). The increase is effective for costs incurred after 1-1-2016, however use of the new threshold won’t be challenged in tax years prior to 2016.