Write off the entire purchase price of qualifying equipment before December 31, 2023.
The Section 179 Tax Deduction is a valuable tax incentive for businesses in the United States. It allows businesses to deduct the cost of qualifying equipment and property purchases as an expense in the year they are acquired, rather than depreciating the assets over several years. This deduction can significantly reduce a company’s taxable income, leading to substantial tax savings. It’s a powerful tool for small and medium-sized businesses looking to invest in assets like machinery, vehicles, or office equipment while enjoying immediate tax benefits. To take advantage of Section 179, businesses need to meet specific eligibility criteria, making it essential to consult with a tax professional or CPA to ensure compliance and maximize tax savings.
Both new and used equipment may qualify for Section 179, provided that the used equipment is new to your business. The entire value of major equipment purchases can be written off for tax purposes right away rather than a slow depreciation over time. When you purchase a new or used piece of machinery from ADMAR and put it to work right away for your business, you may be able to deduct the entire cost of the equipment from your business’s taxable income when filing your 2023 tax returns. This is true even for equipment that will continue to have value to your business for years to come.
For 2023, businesses stand to benefit from a notably increased Section 179 deduction limit, which has been raised to a generous $1,160,000. This represents a substantial boost of $80,000 compared to 2022, offering businesses even greater potential for tax savings. You can now deduct the full cost of eligible equipment purchases up to a cumulative equipment purchase limit of $2,890,000. This expanded deduction allows you to accelerate the depreciation of qualified assets, reducing your taxable income and ultimately lowering your tax liability.
To qualify for Section 179, your business must acquire the equipment between January 1st and December 31st of the tax year and put it into service for your business’s benefit before the year’s end. Additionally, the equipment must be used for business purposes at least 50% of the time to be eligible for this deduction.
Bonus depreciation is a valuable tax benefit that typically comes into play after you’ve reached the Section 179 spending cap. Starting in 2023, there will be a reduction in the bonus depreciation rate, with it dropping to 80%. For instance, if you purchase a $100,000 piece of used equipment in 2023, you’ll be eligible for $80,000 in bonus depreciation, with the remaining $20,000 being depreciated over a seven-year period.
This calculator presents a potential tax scenario based on typical assumptions that may not apply to your business. This page and calculator are not tax advice. The indicated tax treatment applies only to transactions deemed to reflect a purchase of the equipment or a capitalized lease purchase transaction. Please consult your tax advisor to determine the tax ramifications of acquiring equipment or software for your business.
Section 179 provides a unique opportunity for businesses to immediately deduct the cost of qualifying equipment and property, rather than depreciating it over several years. Here’s how Section 179 can be a game-changer for businesses: