A Small-Business Gift: The Section 179 Deduction
It’s not too late to take advantage of the Section 179 deduction, the business equipment purchase deduction. A series of Stimulus Acts from 2008 to 2017 have boosted the limit of this deduction up to $1,000,000 for the 2018 tax year. That’s not a typo: The limit has increased to $1,000,000.
And it gets better. Bonus Depreciation now stands at 100%, allowing businesses to write off the entire depreciation in a single year. If you buy enough equipment to exceed the $1,000,000 deduction limit, you can apply Bonus Depreciation to the amount over $1,000,000.
But there’s more. If you finance your purchase, and take the Sec. 179 deduction in 2018, you will effectively deduct more than you pay. It’s as though you are being paid to buy equipment for your business.
If your business has had a profitable year, a cash purchase combined with Sec. 179 and Bonus Depreciation will lower your tax bill while upgrading your equipment. For businesses that prefer to finance their equipment purchases, now is the time to buy it and put it in place. Many venders have quick-ship programs, even for custom products; remember, the equipment must be put into service by the end of this year.
Section179.org explains the deduction in detail, including a calculator that shows the value of the deduction for any purchase amount. First, review the types of equipment that qualify for this deduction – everything from manufacturing equipment to storage systems, office furnishings, and some types of business vehicles – then talk to your accounting professional about your enterprise’s tax situation. With the potential for rising interest rates next year, this could be the right time to get the triple benefit of Section 179.
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