If you own a small business, the Section 179 deduction is one of the most important tax codes you need to be familiar with in 2021. It lets you deduct all (or part) of the cost of equipment that is purchased or financed and put into place before December 31, 2021.
The only stipulation is that the equipment needs to qualify for deduction. Axiom Capital has all the information you need to know, along with a free Section 179 calculator. It’s a good idea to become familiar with this tax incentive so you can plan for your company’s future as it relates to capital equipment purchases.
The current deduction limit is $1,000,000 on qualifying equipment, and the limit on equipment purchases has increased to $2.5 million. This was enacted through the Tax Cuts and Jobs Act (H.R.1) that was signed into law.
In addition, the bill allows businesses to depreciate 100% of the cost of eligible equipment that is bought or leased from September 27, 2017 through 2022. Lastly, bonus depreciation now applies to used equipment.
ection 179 is a tax deduction for businesses that have placed new or used equipment into service within the year that they purchased or financed. This deduction is not automatic and must be elected. In order to elect to take the deduction, you’ll need to fill out Part 1 of IRS form 4562.
Make sure this completed form is attached to your tax return. Not all types of equipment qualify, therefore you should consult with your accountant or tax professional prior to making any purchases.