In May, 2023, OSHA announced a new National Emphasis Program (NEP) aimed at preventing and…
Every business has equipment, ranging from items as common as a laptop all the way up to sophisticated glass manufacturing machinery. Most businesses acquire some type of equipment throughout the year and tax laws, like Section 179, provide a way to ease the cost of those expenses through write-off deductions.
What Is Section 179
Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment/software purchased during the tax year. Even if you finance a piece of qualifying equipment, you can deduct the entire purchase price from your gross income. Previously, spending for business equipment and vehicles would be depreciated over several years, spreading out the tax benefit
The deduction under Section 179 can be used on new equipment, used equipment and off the shelf software. What is defined as equipment? In tax law, the term “equipment” is broad and includes a range of items like:
- Vehicles (with some additional caveats)
- Office equipment like copiers, fax machines and even office furniture
- HVAC equipment
- Sophisticated machinery used in manufacturing
Essentially, if it is tangible property, it counts. What doesn’t count are any property or land purchases, building structures attached to land or intellectual property like trademarks.
Section 179 Caps in 2020
There are caps to the total amount written off, which is $1,000,000 for 2020. The limits to the total amount of the equipment purchased are set at $2,500,000.
To take the deduction for tax year 2020, the equipment must be financed or purchased and put into service between January 1, 2020 and the end of the day on December 31, 2020. This deduction is not automatic and must be elected. In order to elect to take the deduction, you’ll need to fill out Part 1 of IRS form 4562.
Take advantage of these tax savings before the year ends! Call Wakefield Equipment’s team to learn more about how you can purchase new or used equipment that can help your business be more profitable AND take advantage of these great tax savings!