Best DAC for under $500

I second the EVS if you can find one. No matter the brand, you'll be better off buying used in that price range (or have a cheap one modified, like Jeffga suggests).

Also highly recommended in used, if you can find one: Muse Model 2+ DAC. It will likely be a bit more than $500, but make sure to get the plus version which is HDCD compatible and outperforms the straight model 2 (not a bad DAC either I'm told, and can be had for less than $500 used). Disclaimer: I am currently selling my Muse rig to raise some money, but am not splitting it up so this is not quite as self-serving as it sounds! It is an outstanding rig in both my systems.

Marco

I'll third the EVS Millennium DAC. Top notch parts quality and implementation at a ridiculously low price. Transparency and dynamics in spades. Disclaimer: I've got one but won't sell it, so this isn't self-serving at all. Best of luck.

What transport are you using?

The Ack dAck is an extremely musical DAC that belies it's low price. Mine transformed my system with an utterly intoxicating sound. CD's sound so good I need to upgrade my vinyl rig to get it to catch up. All the good things you've read on this unit in AA are true. It's the one to beat.