If you’re looking for a big deduction (what’s better than 100 percent), the spending cap for Section 179 IRS tax code says that businesses cannot spend more than $2,700,000 on capital equipment during the tax year if they want to qualify for this deduction. Only $1,080,000 of the amount spent can be claimed under Section 179.
The equipment must be purchased and put into service by 11:59 p.m., December 31, 2021. Keep in mind, with the supply chain shortages taking place, you’ll want to make those purchases sooner rather than later.
How much can I save?
Section 179.org offers a simple-to-use calculator to help you estimate your tax savings. Enter the price of your equipment or software to see how much you can save.
According to the Section 179 FAQs, “Most tangible equipment that businesses purchase or lease will qualify for the deduction.”
Common equipment includes machinery, computers, computer off-the-shelf software, office furniture and equipment, qualifying vehicles, or other tangible goods. Qualifying business vehicles with a gross vehicle weight in excess of 6,000 pounds are also included. Property attached to your building that is not a structural component of the building (i.e., a printing press, large manufacturing tools, and equipment) is included. Also, certain improvements to existing non-residential buildings, such as fire suppression, alarms and security systems, HVAC, and roofing are included.
Now is the time to act on this big tax saver. Each year this deduction changes (sometimes even mid-year). So, take advantage of this tax break while it’s still available. Contact us to make sure you’re getting all the equipment deductions you can.