When you’re running a small business, you need to stay abreast of every possible money-saving strategy. So if you’ve been putting off a substantial computer systems upgrade, now is an excellent time to reconsider. The “Protecting Americans from Tax Hikes Act of 2015” (PATH Act) became law on December 18, 2015, and increased the Section 179 deduction limit from $25,000 to $500,000 – a 20-fold increase.
It also extended 50-percent Bonus Depreciation through 2019. Businesses of all sizes will be able to depreciate 50 percent of the cost of equipment acquired and put in service during 2017. Then bonus depreciation will phase down to 40 percent in 2018 and 30 percent in 2019. So you can basically write off 50 percent of all the equipment and software your business needs to buy or finance this year.
Section 179 allows a business to write off an entire equipment purchase for the year it is purchased, rather than writing a portion off for the next few years. According to the website for the deduction, “all businesses that purchase, finance and/or lease less than $2 million in new or used business equipment during tax year 2017 should qualify” for the deduction.
This is a great benefit to small and medium business owners. You can buy up to $500,000 in machinery, computers, software, office furniture, vehicles or other tangible goods and thereby reduce your taxable income on your current year’s tax return.
So if you are going to need a new server, upgrade, move to the cloud or perhaps need a new phone system in the near future, before the end of the year is a great time to help maximize your Section 179 deduction. After all, no one wants to hand over one penny more to the government than is absolutely necessary. We all work way too hard for that!
The only stipulation is that the equipment purchased must be “placed into service in the same tax year that the deduction is being taken.” This has the potential to save small businesses thousands of dollars. Just make sure that the equipment is both purchased and put into service by the end of this year, December 31, 2017! Learn more at Section179.org.
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