Skip to content
What is it?
A part of the IRS tax code, Section 179 allows businesses to deduct the full purchase price of qualifying equipment bought or financed during the tax year. This significant tax incentive is designed to encourage businesses to invest in themselves by purchasing the equipment they need to grow. Section 179 can be extremely profitable for your business, allowing you to invest in equipment, vehicles, and software while retaining more of your tax dollars. For a more in-depth understanding, explore the Section 179 Explained page.
The Section 179 deduction applies to tangible personal property such as machinery and equipment purchased for use in a trade or business, and if the taxpayer elects, qualified real property. The Tax Cuts and Jobs Act amended the definition of qualified real property to mean qualified improvement property and some improvements to nonresidential real property, such as roofs; heating, ventilation and air-conditioning property; fire protection and alarm systems; and security systems. Revenue Procedure 2019-08 explains how taxpayers can elect to treat qualified real property as Section 179 property.
Deductions are good on new and used equipment financed or purchased and put into service between January 1, 2023, and December 31, 2023. The 2023 deduction limit has increased to $1,160,00 (up $80,000 from 2022). The 2023 maximum spending cap on equipment purchases is $4,050,000 before the Section 179 Deduction begins to be reduced on a dollar-for-dollar basis. Larger businesses that spend more than $3,780,000 on equipment won’t get the deduction making the Section 179 Deduction a “small business tax incentive”. You are also able to collect on Bonus Depreciation at 80% for new and used equipment. More detailed information is available at section179.org on how to take advantage of this deduction for 2023.
What you can deduct:
- New or used equipment purchased for business purposes, including machinery.
- Tangible personal property used in the business – all the stuff to run your business.
- Vehicles with a gross weight above 6,000 pounds as long as they are used solely for business.
- Office furniture like desks, chairs, office equipment, computers and software
- Non-structural property attached to your business – especially large pieces of equipment.
- Property used for business and personal use – calculated on percentage of time used by the business.
- Improvements made to non-residential buildings – new roofs, alarms, fire-suppression systems.
What you CAN’T deduct:
- Real property – Land, buildings, permanent structures
- Property used outside of the United States – some exceptions apply.
- Property used to furnish lodging.
- Property that was gifted or inherited – includes purchased property from relatives or business associates.
Deduction Calculator
Determining your potential savings from Section 179 can seem complex, but this deduction calculator makes it simple. Input your specific numbers, and you will be provided with an estimate of your tax savings and net cost after tax. Many businesses find that if they finance or lease their Section 179 qualified equipment, the tax savings can exceed the total of the first year’s payments on the equipment. This demonstrates the significant incentive Section 179 offers to small and medium businesses. Calculate Your Potential Savings here
Gregory Poole can help get you the right equipment for your business, new or used, in order for you to take advantage of these deductions while there is still time in 2023. Let us help achieve your goals in 2023.
