Small-Medium Companies: Potentially Huge Tax Benefits on 2017 Equipment Purchases

Did you know your company may be able to expense up to a $500,000 deduction on equipment if it’s bought and put into service before midnight on December 31, 2017?

This may effectively reduce the purchase price of your capital expenses, including computers, digital storage, software, and other office equipment!

Section 179 of the US tax code is aimed at businesses that purchase up to $2M worth of equipment in 2017, and it could add tens of thousands of dollars or more to your bottom line.

According to “Section 179 of the IRS Tax Code allows a business to deduct, for the current tax year, the full purchase price of financed or leased equipment and off-the-shelf software that qualifies for the deduction. The equipment purchased, financed or leased must be within the specified dollar limits of Section 179, and the equipment must be placed into service in the same tax year that the deduction is being taken (for example, the equipment must be put into service between January 1st and December 31st of the year the deduction is to be taken.)”

The Section 179 Tax Deduction is meant to encourage businesses to stay competitive by purchasing needed equipment, and writing off the full amount on their taxes for the current year. Here is a calculator you can use to estimate how much you could actually save in real dollars this year.

For example, if you make a capital purchase of $50,000…

  • Cash Savings on your purchase — assuming a 35% tax bracket — would be $17,500
  • Which would lower the cost of equipment (after tax savings) to $32,500

This extra tax break may help you save even more on something your team needs, like, hmmmm… one of these:

Most equipment that businesses purchase or lease will qualify for the deduction. Here is a list of equipment that qualifies for the Section 179 Deduction.

To take advantage of these high Section 179 limits for 2017, your equipment must be purchased and put into service by midnight December 31, 2017.

We’re not tax experts here at SNS, so please consult your tax preparer to ensure that you’re eligible for/complying with IRS §179. Here are some more links that may help you decide if now is a great time to buy some new equipment and effectively reduce its price this tax year: