The IRS Section 179 deduction is one of the most beneficial tax breaks for small businesses. It allows them to deduct up to $1 million in qualifying equipment and software from their taxes in a single year, allowing them to save money on upfront costs and improve cash flow. This article will explain what qualifies as eligible expenses under Section 179, how it works with other deductions, and how much you can expect to save by taking advantage of this valuable benefit.

Qualifying for Section 179 Deductions

To qualify for the Section 179 deduction, businesses must purchase qualifying equipment and software during a given tax year. Eligible expenses include new or used machinery, computers, office furniture, and other tangible business property with an expected life of more than one year. Business owners can also claim deductions on up to $250,000 in improvements to nonresidential real property, including roofs, HVAC systems, fire protection systems, and more.

It’s important to note that the Section 179 deduction must be taken in the same year that the equipment or software was purchased. It cannot be spread out over multiple years. Additionally, businesses can’t carry forward any unused deductions from one year to the next.

Big Savings

When used in conjunction with other tax credits and deductions, Section 179 can be a major money-saver for small businesses. When taking advantage of this deduction, business owners should also consider the Bonus Depreciation provisions, which allow them to claim up to 50% of depreciation for certain equipment purchased during the tax year.

Section 179 can provide significant savings for small businesses. For example, if a business purchases $1 million worth of equipment and takes advantage of all available deductions, it could save up to $330,000 on taxes! This means that the company would end up paying significantly less in taxes than they would have without the deduction.

By taking advantage of the Section 179 deduction, small businesses can save a significant amount of money on taxes that would otherwise have been paid. It is an incredibly valuable resource for business owners looking to maximize their tax savings and improve their cash flow. To learn more about how you can benefit from this tax break, contact your accountant or financial advisor today. They can help you determine if this deduction is right for your business and how much you could save by taking advantage of it. Hudson Lending Company offers a wide range of financing for businesses that want to take advantage of Section 179 deductions. Contact our team today to learn more.