What to Know Regarding Section 179 Deductions
Make Equipment Investments More Affordable with a Section 179 Deduction
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For many small- to medium-sized businesses, capital investments – such as new software or equipment – are the lynchpin for future growth. Fortunately, financing these crucial enhancements through a working capital or equipment loan is not as expensive as you may think. Tax deductions, including Internal Revenue Code Section 179, make capital investments more affordable.
What is Internal Revenue Code Section 179?
Section 179 allows businesses to deduct qualifying business expenses in the year they place a depreciable asset into service, instead of capitalizing and depreciating the asset over time. This lowers the current year’s tax liability.
Common expenses that you can write off under Section 179 include:
off-the-shelf software and computers,
equipment, such as medical, dental and manufacturing equipment,
qualifying business use-only vehicles, and
office furniture and equipment.
Not all business expenses are eligible for a Section 179 write-off. For more information on what expenses you can and cannot deduct, visit Publication 946(Opens in a new window) on IRS.gov(Opens in a new window) or consult your tax professional.
What You Need to Know for 2021
For 2023, the IRS limits your Section 179 deduction to $1,160,000 on total purchased property valued at or under $2,890,000 and put into service during the current tax year.
Property placed into service valued at greater than $2,890,000 will reduce your maximum deduction amount.
In addition, in 2023 there are new rules for phase down of special depreciation allowance of 80%. Consult the IRS website for details.
How Section 179 Could Help Your Business
Whether you are looking to expand, replace or upgrade your current equipment, applying a Section 179 deduction can lower the financial burden to your business and open new possibilities for growth.
As you review your business financing strategy, determine if a new piece of manufacturing equipment, the latest piece of constantly-evolving medical technology, or new CRM software could impact your earnings potential. Then determine if a Section 179 deduction could make these purchases more affordable.
Talk with your Sunflower Bank lending partner. We’re here to help your business grow and flourish. Our customizable financing options and SBA Preferred Lending opportunities(Opens in a new window) enable you to benefit from needed capital improvements.
This article contains general information only. Sunflower Bank is not, by means of this article, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This article is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.