Did you know that buying used equipment for your business can save you a significant amount off your federal taxes this year? Section 179 of the U.S. tax code is a gift to small business owners who are looking to expand their business by purchasing equipment.
This year, Congress allows business owners to deduct up to $500,000 in qualifying equipment in the year of its purchase, even if you do it on December 31. Under normal circumstances, you’d have to depreciate a long-lived asset over a number of years (for example, a printing press might have a life of 11 years). This law encourages small businesses to expand at a more rapid pace by keeping tax dollars in your pocket.
What’s qualifying equipment? It’s a very broad class of assets both new and used, including:
- Equipment purchased for business use (e.g, machines)
- Tangible personal property used in business
- Business vehicles with a gross vehicle weight rating in excess of 6,000 lbs.
- Computer software (“off the shelf”)
- Office furniture
- Office equipment
- Property attached to the building that isn’t a structural component (commonly known as “fixtures”, like a printing press, air compressor, etc.)
- Assets with its use split between personal and business use (your deduction will be reduced by the percentage of use time devoted to personal use)