Want to lower the true cost of ownership on your business equipment? Here’s how:
Business owners who acquire new or used equipment and software for their business usually prefer to expense the cost in a single tax year, rather than depreciate a little at a time over a number of years. This deduction is known by its section in the tax code, a Section 179 deduction.
Under Section 179, businesses that spend less than $2,500,000 a year on qualified equipment, can accelerate depreciation expense up to $1,000,000 in 2019.
The rules are designed for smaller companies, so the $1,000,000 deduction phases out dollar for dollar when a business purchases more than $2,500,000 in equipment and software in one year. (i.e., If a company purchases $2,600,000 in qualified equipment in 2019, they can only accelerate depreciation expense up to $900,000.)
100% bonus depreciation is also available for new or used equipment purchases for those amounts not covered by Section 179.
In order to take advantage of the 2019 tax incentives, your business equipment must be put in use by year-end. Each company should contact their tax advisor to learn about the specific impact to your business.