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Deduct the Cost of New Equipment or Software Purchased by December 31st

Section 179 is a tax code designed to help businesses acquire the equipment they need to run efficiently. By allowing businesses to deduct the full amount of the purchase price of equipment (up to certain limits), Section 179 is a fantastic incentive for businesses to purchase, finance or lease equipment this year.

The 2015 deduction limit is $25,000, and the spending cap is $200,000. This deduction is available for equipment and software purchased and placed into service by Dec. 31 of each tax year.

For example, if a company purchases new equipment for a total of $8,000. The entire amount is deductible, and the lowered cost of the equipment less the tax savings is $5,200. The cash savings on this amount is $2,800, based upon an assumption of a 35 percent tax bracket.

This adds up to real money for small businesses, especially if they use this at the end of the year. If tax year 2015 was a profitable year for the business, the 179 deduction is one of the best planning tools available. If you buy qualifying equipment before year end, and also placed into service by December 31, 2015, up to $25,000 can be deducted on a dollar per dollar basis.

Some of the items that qualify for Section 179 deduction include:

  • Equipment (machines, etc) purchased for business use
  • Tangible personal property used in business
  • Computers
  • Computer “Off-the-Shelf” Software
  • Office Furniture
  • Office Equipment

You can calculate your savings at the Section 179 website.

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