Year-end is quickly approaching and deciding on those year-end purchases is probably already on your mind. As you may know, Section 179 allows small businesses that purchase qualifying equipment/software in the current calendar year a substantial tax deduction of up to $1,080,000. The spending cap on equipment for the 2022 Calendar year is $2,700,000. “This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar-for-dollar basis. This spending cap makes Section 179 a true "small business tax incentive".
Source: https://www.section179.org/section_179_deduction.html
The following items generally qualify for the Section 179 Deduction:
- Equipment (machines, etc) purchased for business use
- Tangible personal property used in business
- Computers & "Off-the-Shelf" Software
- Office Furniture & Equipment
- Property attached to your building that is not a structural component of the building (i.e.: a printing press, large manufacturing tools and equipment)
- Partial Business Use (equipment that is purchased for business use and personal use: generally, your deduction will be based on the percentage of time you use the equipment for business purposes).
Source: https://www.section179.org/property_that_qualifies_for_section_179.html
*Remember that to Qualify for the deduction these items must be purchased and put into use between January 1 and December 31 of the tax year you are claiming.
Calculate Your Deduction
Want to see what your Section 179 Tax Deduction will be? The below calculator link can estimate your equipment deductions for the 2022 calendar.
2022 Section 179 Tax Deduction Calculator
Leasing your Equipment and Section 179
What are the advantages of Leasing and Financing your equipment?
The obvious advantage to leasing or financing equipment and/or software and then taking the Section 179 Deduction is the fact that you can deduct the full amount of the equipment and/or software, without paying the full amount this year. The amount you save in taxes can actually exceed the payments, making this a very bottom line friendly deduction (you are reading this correctly; in many cases, the deduction will actually be profit).
Always Consult a Tax Professional
On equipment purchases and leases always consult your Tax Professional to ensure you are properly recording your deductions under the Section 179 Amendment.
In need of a server, computers, and other equipment for your office?
If you currently have aging hardware and want to take advantage of Section 179 before the end of 2022, contact us today to ensure you meet the December 31st deadline and take full advantage of this deduction.