Maximize Your Section 179 Tax Savings Every Year!
What Is Section 179?
Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves. Section 179 is one of the few incentives included in any of the recent Stimulus Bills that actually helps small businesses. Although large businesses benefit from Section 179, the original target of this legislation was much needed tax relief for small businesses – and millions of small businesses are actually taking action and getting real benefits.
How Does Section 179 Work?
When your business buys certain items of equipment, it typically gets to write them off a little at a time through depreciation. In other words, if your company spends $50,000 on a machine, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example). Now, while it’s true that this is better than no write off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it. In fact, if a business could write off the entire amount, they might add more equipment this year instead of waiting over the next few years. That’s the whole purpose behind Section 179 – to motivate the American economy (and your business) to move in a positive direction. For most small businesses the entire cost can be written-off on that year’s tax return.
Limits of Section 179
Section 179 does come with limits – there are caps to the total amount written off, and limits to the total amount of the equipment purchased. See our “IMPORTANT NOTICE: Section 179 Expanded” post for details on limits for a given tax year.
How Can I See How Much Money I Can Save?
Included on our Finance Calculators is a “Section 179 Tax Savings” feature to show you an estimate of how much you can save with this benefit. Simply put an amount in the calculator, and hit the calculate button to see Potential Tax Savings. By default, a 21% tax bracket is assumed for calculation purposes.
Business Is All About The Bottom Line!
When considering equipment for your business the decision almost always depends upon the bottom line. For your convenience, our finance calculators automatically print the total Bottom Line Equipment Cost After Tax Savings along with every quote.
Make sure you consult with your tax advisor to understand your eligibility and to discuss any specific questions you have about these tax benefits.