Investing in new equipment and technology is essential for growing your business, but it doesn’t have to come at a huge tax cost. The IRS Section 179 tax deduction lets you deduct the full cost of qualifying assets in the year you purchase them, helping you lower your taxable income and reinvest in your business faster.

Why Section 179 Matters

• Deduct the full cost of equipment and software immediately.
• Reduce taxable income and lower your overall tax liability.
• Improve cash flow by turning tax savings into working capital.
• Upgrade technology and equipment without delay.
• Reinvest savings into hiring, expansion, or additional assets.

This deduction is a game-changer for small and mid-sized businesses looking to modernize operations and stay competitive.

What Qualifies for Section 179?

Eligible assets include:

• Business machinery and equipment
• Computers and office technology
• Certain software and business-use improvements
• Some property improvements like HVAC, roofs, and security systems

Note: Land and inventory do not qualify.

Deduction Limits & Considerations

• Annual Limit: There’s a maximum Section 179 deduction each year .(e.g., $1.16 million for 2023)
• Phase-Out: Large equipment purchases over a set threshold reduce the deductible amount.
• Income Limitation: Deduction cannot exceed your business’s taxable income, but unused amounts can carry forward.

How It Works: Real-World Example

Imagine your business buys $100,000 worth of new machinery. By applying Section 179, you can deduct the entire $100,000 in the same year, potentially saving $25,000 in taxes if you’re in a 25% tax bracket. That’s immediate savings to reinvest in your business growth.

Get the Most from Section 179

• Plan purchases strategically near year-end.
• Combine Section 179 with bonus depreciation for larger investments.
• Keep detailed records to ensure compliance.
• Consult a tax professional to maximize your savings.

Note: Please speak to your tax advisor for full details as all cases are different.