Ok, so what is Section 179?
This section of the US tax code allows a business to
deduct the FULL PURCHASE PRICE of equipment in 2021
...even it was financed.
- To be eligible for a 2022 Section 179 deduction, the eligible equipment must be purchased and put into service by midnight 12/31/2022. It is not enough to simply buy the equipment. Please keep supply chain issues and delivery times in mind when buying or using Section 179 Qualified Financing, as there are currently no plans to waive the “put into service” requirement.
The Section 179 deduction for 2022 is $1,080,000 (up from $1,050,000 in 2021). This means U.S. companies can deduct the full price of qualified equipment purchases, up to $1,080,000, with a “total equipment purchase” limit of $2.7 million (up from $2.69 million in 2020).
A 100% Bonus Depreciation is generally taken after the Section 179 spending cap is reached. The bonus depreciation includes both new and used qualified equipment.
If you work at a small or medium sized business, this may be the exact thing that you team has been waiting to take advantage of all year. It will simultaneously reduce tax liability for the company, and get you the equipment you need to increase productivity. Most tangible goods used by American businesses, including "off-the-shelf" software and business-use vehicles (restrictions apply) qualify for the Section 179 Deduction.
It's a win-win and exactly what the folks in Washington had in mind when they authored Section 179.
If you want to learn more, check out Section179.org