Are you aware that your business is eligible to receive tax deductions on equipment leased or purchased?
Under the Section 179 tax code, businesses receive an increased tax deduction based on the purchase or finance of qualifying business equipment.
To take advantage of the deduction, the equipment must be placed into service in the same tax year that the deduction is being taken. What that means is that it must be put to use between January 1st and December 31st of the year of the deduction.
Section 179 Updates
In December of 2017, as you are probably aware, The Tax Cuts and Jobs Act was signed. This bill reduces tax rates and modifies policies, credits, and deductions for both individuals and businesses.
Subsequently, the deduction limit increased from $500,000 to $1,000,000. Also, the purchase limit on equipment purchases increased from $2 million to $2.5 million.
In addition to the Section 179 deduction, there is bonus depreciation which becomes available as an additional deductible above what is available within Section 179. The bonus depreciation increases from 50% to 100%.
Section 179 Benefits
As a business owner, you can continue to write off all equipment purchased until you reach the above limits. This initiative is built to incentivize small and medium sized businesses to purchase equipment and invest in growing their own business. This deduction significantly reduces the amount of taxable income ultimately lowering overall tax burden.
The Section 179 tax deduction overall enhances your bottom line and provides advantages such as cash savings on your purchases. In turn, this will ultimately lower the cost of equipment after those tax savings are factored in.
What Qualifies for the Deductions?
- Company fleet
- Office furniture, computers, printers and copiers
- Medical equipment
The Bottom Line
If you are planning to acquire equipment and grow your business more efficiently, consider equipment leasing with the Section 179 deduction.