Published December 2, 2016 | Updated March 28, 2022
Waiting for an opportunity to save on equipment and technology your business could use now? With Section 179, you can make your own savings opportunity anytime you want. More than seven out of 10 business-owners don’t understand the financial impact of Section 179 on the affordability of commercial equipment and technology.
Well, let’s fix that. First, what is Section 179 and what can it do for your business? In a nutshell, Section 179 allows you to get an effective discount equal to your tax rate on all qualifying equipment and technology up to the deduction limit, currently $1,080,000. It allows businesses (subject to specific limitations) to deduct the full cost of equipment and technology upfront, rather than depreciate it over a number of years.
What kinds of equipment and technology qualify? Just about anything, including office equipment and technology, furniture, vehicles, manufacturing equipment and technology, medical equipment and technology, and much more.
So let’s get to the financial impact. Here’s a simple example based on a common tax situation:
- Purchase Price: $50,000
- Total First Year Deduction: $50,000
- Tax Savings on Purchase (based on a typical 21% rate): $10,500
- Effective Cost of Equipment: $39,500
To qualify for Section 179, assets must be purchased and put into service by December 31st of that tax year. Both new and used equipment and technology can qualify, and you can even deduct the cost of qualifying software. Talk to your tax professional for details and be sure to ask about using Section 179 in combination with bonus depreciation if your equipment and technology needs exceed $1,080,000 for the year.
By working closely with your tax advisor and an experienced finance company, you might be able to put more or better revenue-producing equipment and technology into service. You can stop running equipment and technology “until the wheels fall off.” You can bid on that new project more effectively and grow your business faster.
At LEAF, we work with customers every day to maximize their equipment and technology purchasing power — putting more revenue-producing equipment and technology into service — with a simple, fast process and customizable terms that give you more control of budgets and cash flow.