While many tax incentives for small business have been shot down in recent years, Section 179 of the IRS tax code remains one legal “loophole” worth looking into.
This year (unless Congress changes it at the last minute, which they have done in the past several years) Section 179 allows you to purchase up to $200,000 of qualified equipment and software. With that purchase, you can write off up to $25,000 as a Section 179 deduction.
That’s less than in previous years, but the good news is, you can still triple your savings. Here’s how:
- Save on taxes. If your business could use new software, equipment or services, but the expense is just a little beyond your reach, the tax savings you’ll gain from a Section 179 deduction might just tip the balance in your favor.
- Take advantage of year-end price reductions. Manufacturers and service providers need to look good to their investors at year’s end. It’s a great time of year to bargain for the best deal.
- Leverage your savings with smart financing. Taking advantage of an equipment lease or equipment finance agreement could turn out to be the most profitable business decision you’ll make this year. How? By combining a properly structured equipment lease or equipment financing agreement with a full Section 179 deduction, your cash outlay for the year will very likely be less than your deduction.
Plus, your business can start profiting immediately from the new equipment, software or services you invest in.
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Disclaimer: Everyone’s tax situation is different. Consult with your own tax professionals for specific advice.