What Section 179 Means for Your Business

We want to make sure you’re aware of every possible way to grow your business. This includes being aware of how the Section 179 tax deduction can benefit you. Although Section 179 does not increase the total amount you can deduct, it allows you to get your entire depreciation in one year rather than over an asset’s useful life.

Essentially, the code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means if you buy a piece of qualifying equipment, you can deduct the full purchase price from your gross income. Any long-term, tangible property that you use in your business more than 50% of the time can quality for the deduction.

Example: You spend $5,000 on a new automatic floor scrubber. Under Section 179 deduction, you would receive a first-year tax savings of $1,750 (assuming a 35% tax bracket). This would lower your cost of equipment to $3,250 after including the tax savings!

Use this Tax Deduction Calculator to calculate your own savings.

There are some limitations. You can’t deduct more in one year than your net taxable business income for the year. There is a $500,000 limit on the total amount of business property expenses you can deduct each year. You also can’t get a Section 179 deduction in a year that you have a net loss.

For more information and helpful resources, visit section179.org. You should also check with your accountant to find out the best way for you to take advantage of this valuable deduction and make sure you make your purchase before December 31st.

Source: Ashley Nalepka