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Cost & How To Buy

Unlock Tax Savings Through Section 179

Posted December 12, 2023

Unlock Tax Savings Through Section 179

As 2023 concludes, how can businesses cut costs while expanding operations? Section 179 is the answer. Section 179 of the US Tax Code offers a powerful solution, allowing companies to deduct the entire purchase price of qualifying material handling equipment in the year of acquisition.

What is Section 179?

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Traditionally, businesses could only write off equipment depreciation annually. Section 179 changes the game, enabling companies to deduct the full purchase cost immediately. This section of the U.S. internal revenue code is an immediate expense deduction that business owners can take for purchases of depreciable business equipment, instead of capitalizing and depreciating the asset over a period of time. In 2023, businesses can potentially deduct up to $1.16 million in qualifying purchases.

Section 179 Savings Example:

Consider a $100,000 equipment purchase with a 21% tax bracket. By utilizing this expense deduction, businesses could save $21,000 in taxes, reducing the equipment cost to $79,000.

Key Considerations

  1. Investment Window: Equipment must be bought, financed, or leased between January 1, 2023, and December 31, 2023.
  2. Purchase Cap: Businesses are capped at $2.89 million in qualified property to maximize deductions.
  3. Qualified Property: Tangible, depreciable items actively used in business qualify. This includes heavy equipment, machines, office tools, computers, and software.
  4. Usage Requirement: Equipment must be used for business purposes more than 50% of the time.
  5. Timely Deployment: Purchase or lease and deploy equipment by year-end.
  6. Profitability: A taxable profit is necessary for eligibility.

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Consult with Experts
Navigating tax laws requires professional guidance. Consult with tax experts to ensure a thorough understanding of Section 179 implications and requirements. To learn more about qualifying equipment and machinery, checkout our related posts on LinkedIn!

As 2023 wraps up, businesses can strategically reduce costs and boost financial positions by capitalizing on tax write-offs. It’s more than acquiring equipment; it’s a formula for cost reduction and optimal returns, fueling sustained growth.

Looking to buy a forklift or other qualifying machinery? Contact us by email at [email protected], or phone at 855-909-9700!

 

 

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