179 IRS Tax Credit
Section 179 of the IRS tax Code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased of financed during the tax year, up to $1,080,000.
What is the IRS Section 179 Deduction?
Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year, up to $1,080,000. If your business buys or leases a piece of qualifying equipment, you can deduct the full purchase price from your gross income. The U.S. government created Section 179 to encourage businesses to spend money on equipment.
Section 179 is ideal for small and medium businesses looking for a tax advantage in 2022. Please remember, the $1,080,000 limit and 100% Bonus Depreciation are promised through 2022! It is also important to note that the 100% Bonus Depreciation includes used equipment.
2022 IRS Section 179 Tax Deduction
How does IRS Section 179 work?
When a business purchases qualifying equipment, the depreciation is typically written off a little at a time. For instance, if the equipment cost was $25,000, IRS Section 179 allows for 100% of the equipment cost to be written off in the year it was placed into service. A breakdown of Section 179 with an equipment cost of $1,500,000 - and a 21% corporate tax rate - would be:
- Section 179 Deduction - $1,080,000
- 100% Bonus Depreciation - $420,000
- Total 1st Year Deduction - $1,500,000
- Federal Cash Savings - $315,000
- Lowered Cost of Equipment - $1,185,000
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