Section 179 and the Changes for 2022IT Resource
As we approach the end of the year, it’s a good time to start thinking about ways to reduce your overall tax burden. If new equipment, software, business vehicles or office furniture has been on the list for a while, now is the time to make it happen. Section 179 is a tax incentive program that allows business owners to deduct certain technology expenses, in turn, offsetting the cost of the purchase – this is a great opportunity to maximize your purchasing power by taking a large tax deduction on qualifying equipment and software. But, in order to qualify, purchases must be made before the end of the year.
What’s new this year?
The Section 179 deduction for 2022 is $1,080,000, that’s an increase of $30,000 from last year. So now U.S. businesses can deduct the full price of qualified equipment purchases, up to $1,080,000, with a total equipment purchase limit of $2.7 million (up from $2.62 million in 2021). In addition, qualifying businesses can take advantage of a 100% bonus depreciation on new and used equipment in 2022 as well.
When should you act?
Section 179 expires at midnight on December 31, 2022, so it’s in your best interest to act now.
What qualifies for a deduction?
Most types of business equipment will apply because that’s exactly what Section 179 was designed for. Because many purchases are made on an ongoing basis, Section 179 is designed to make buying and leasing that equipment financially attractive during this calendar year. Some of the qualifying purchases are:
- Off-the-Shelf” Software*
- Business Vehicles
- Equipment (machines) for business use
- Office Furniture and equipment
*Off-the-Shelf is any software that is not custom designed, available for the general public, and is used in your business as an income-producing activity.
How much can I save on taxes?
Depending on how much you plan to purchase, Section 179 can really make a difference when it comes to your tax savings. To find out just what the amount will be, you can use this Section 179 calculator to enter your purchase price and it will show you the deduction.
What should you do now?
- Talk with your financial advisor or accountant to determine how your business can best utilize this tax break
- Contact our sales department so we can begin planning these purchases. But don’t wait, qualifying purchases must be ordered and put into service by December 31, 2022.
By taking advantage of Section 179 you could lower operation costs and gain some new equipment in the process. Deductions are such an important component for all small businesses, don’t let this deal pass you by!
Questions? Contact our sales department and we’ll walk you through the process.
* This article was based on information provided on the Section 179 website at www.section179.org.