Section 179 and Equipment Financing

Section 179 of the IRS code is a tax deduction that allows businesses to immediately deduct the full cost of qualifying equipment and/or software purchased or financed during the tax year, up to a certain limit. The purpose of this deduction is to incentivize businesses to invest in new equipment and technology by providing tax relief.

For the 2023 tax year, the limit for the Section 179 deduction is currently set at $1,160,000. This means that businesses can deduct up to $1,160,000 of the cost of qualifying equipment and/or software in the year it was purchased or financed. Additionally, businesses can also take advantage of bonus depreciation, which allows them to deduct an additional 100% of the cost of qualifying equipment and/or software that exceeds the Section 179 limit.

To be eligible for the Section 179 deduction, the equipment and/or software must be used for business purposes more than 50% of the time. Qualifying equipment and technology can include machinery, vehicles, computers, software, and office furniture.

It's important to note that the Section 179 deduction cannot be used for equipment and/or software that is leased or rented. Additionally, businesses cannot use the deduction to create a tax loss, but it can be carried forward to future tax years.

Overall, the Section 179 deduction can be a valuable tax strategy for businesses looking to invest in new equipment and technology while also saving money on their taxes. As always, it's important to consult with a tax professional or accountant to ensure that you are eligible for the deduction and are taking full advantage of its benefits.

See: https://www.section179.org/section_179_deduction/ for more information.