How the IRS Tax Code Can Help You Reinvest in Your Business
Looking to reinvest in your business and cut your tax burden at the same time? Section 179 of the tax code might be the perfect solution!
According to Section 179, business owners can deduct 100% of the cost of qualifying equipment from their gross income. It’s all part of the United States’ efforts to encourage businesses to buy equipment and invest in themselves.
Here’s how it works:
1) Purchase qualifying equipment during the 2022 calendar year.
2) Make sure the purchase price falls within the price range outlined in the code.
3) Use the qualifying equipment during 2022.
The maximum amount eligible for deduction for most Section 179 property in 2022 is $1,080,000, according to the Internal Revenue Service (IRS). (See https://www.irs.gov/pub/irs-drop/rp-21-45.pdf.) The tax code also limits the total amount of purchased equipment to a combined total of $2,700,000 in order to qualify.
Let’s say that you purchase a piece of machinery for your business at a cost of $75,000, with zero salvage value. You can either take the cost of that purchase and depreciate it over the course of five years at $15,000 each year, or you can take advantage of Section 179 to write off the entire $75,000 in the current calendar year.
It’s important to note that both new and used equipment are eligible for this Section 179 deduction, as long as the equipment is new to your business. Also note that the equipment is only eligible for this deduction in the first year you use the equipment, not the year you purchase it. So if you buy equipment in 2022 but don’t use it until 2023, you’ll need to wait until you file your 2023 tax return before taking advantage of Section 179.
If you’ve been considering purchasing equipment at machinesused.com, Section 179 gives you one more reason to move forward before years’ end. Check out our current inventory at https://www.machinesused.com. Have a particular piece of equipment in mind? Our trained sales experts are standing by to help!
Note: MachinesUsed.com doesn’t offer legal or tax advice. We recommend you check with your accountant before making any decisions related to tax filing.