Sep 1, 2022

The biggest tax deduction you might ever take: what you need to know about Section 179

Deduct up to $1,080,000 this year.

If you’re not familiar with Section 179, it’s the IRS business tax deduction that allows you to deduct the full price of new or used business equipment. This year, the deduction is $1,080,000, meaning you deduct the full cost of more than $1 million worth of equipment you’ve purchased, leased or financed.

You heard that right, the full cost, instead of depreciating it in little bits. It’s something worth considering

The equipment must be both purchased and put into service during the calendar year, so you have until midnight on December 31 to acquire it, plug it in, gas it up and start it, or similar.

The good news is most tangible business equipment and work vehicles qualify (again, both new or used), and any size business can take the deduction. Even the smallest contractor buying one generator can deduct the full cost of it.

This year, the tax deduction is more important than ever because many companies are seeing their projections and numbers shrink as inflation and rising interest rates continue. So, taking a deduction on the entire cost of acquired equipment (as opposed to yearly depreciation) can make a very large difference to 2022’s bottom line.

This is why Section 179 can matter so much in 2022. You’re taking the deduction all at once instead of spreading it out, but for most companies, money now is superior to money later. Especially in the business climate we find ourselves in.