The Section 179 deduction may be a complete mystery to you and may seem like a complicated tax code, but here’s the reality- it’s not complicated, and we’re about to demystify it for you.
Let’s take a closer look!
What is Section 179?
The U.S. government established Section 179 as an incentive for businesses to buy equipment and consequently invest in themselves.
Put simply, Section 179 is a tax code established by the IRS that allows businesses to deduct the FULL purchase price of (qualifying) office equipment purchased (or financed) during the tax year. That means you can deduct the entire purchase price (not exceeding one million dollars) of the office equipment from your gross income.
Business equipment that can qualify may include:
- Copiers
- Printers
- Computers/Laptops
- Non-custom Business Software
- Machinery
- Office Furniture
- Much more
This is incredibly beneficial for small businesses, and many have already taken action and seen real benefits that have come as a relief.
Take Full Advantage of Section 179
So you may be thinking that there is just no way your company can front the cost to buy office equipment full price. Here’s the good news for you- You can still take full advantage of the Section 179 deduction if you are leasing equipment! The key to this is to lease a qualifying piece of equipment with a guaranteed purchase option. Then you can deduct the full purchase price (up to $510,00) from your gross income.
It may not be the one million dollar deduction you would receive if you purchased the equipment outright, but it’s still a significant deduction! The added benefit to this is that you can deduct the full amount that first year, even if you aren’t paying the total amount that year. In many cases, this can mean that the tax deduction improves your cash flow.
Calculating How Much Section 179 Saves Your Company
Are you considering the purchase or leasing of office equipment in the coming tax year? Check out the Section 179 Deduction Calculator to estimate your tax savings. If you have additional questions on Section 179 and which equipment you can deduct, contact us today!
