It is Time to Take Advantage of Section 179: Is it Right for You?
If you’re a small- to medium-sized business owner, you know that running a business requires purchasing (expensive) equipment and software. The good news is that a tax deduction could help alleviate some of the financial burdens of those operational expenses. The catch? Your business needs to finalize purchases before the end of the calendar year. If you want to save money and invest in your business’s growth, let’s dig into Section 179, including an overview, updates, and pros and cons.
What is Section 179?
Section 179 is a tax break for small businesses. This tax break allows businesses to write off the total purchase price of any qualifying equipment or software purchased/financed in a calendar year. Most business expenses, such as equipment, computer software, and furniture, apply to Section 179. Consult your accountant or tax advisor about your specific business expenses to see if you qualify for this write-off before the end of 2023.
What’s new in 2023?
The Section 179 deduction limit has increased by $80,000 from 2022, making it $1,160,000. With the new stipulations, a business can now deduct the entire cost of qualified equipment up to a total equipment purchase limit of $2.8 million. This is an excellent opportunity to invest in new equipment to help your business grow and thrive!
Pros of Section 179
With Section 179, a business can immediately deduct expenses on its taxes for the calendar year (2023), lowering yearly tax liability. By utilizing Section 179, small businesses can take advantage of the tax write-off and use the money saved to fuel growth in other areas. This can lead to increased investment in equipment and technology or even hiring additional staff. Section 179 can be a valuable tool for small businesses looking to expand and thrive.
Cons of Section 179
One thing to consider before taking a Section 179 deduction is that it could move your company into a lower tax bracket. This is because deducting a larger amount upfront could offset any later income that may have been taxed at a lower rate. Consult with your accountant or tax advisor to weigh the pros and cons of taking this deduction to determine if it will positively benefit your business.
Next Steps
Interested in making a purchase before the end of the year? Contact an OCS finance professional any time at 877-701-2391 or ocs@oakmontfinance.com. Ready to apply today? Click here to get started on our 5-minute application.
Are you curious about what the previous year’s benefits looked like under Section 179? Check out the links below:
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