top of page

Section 179: Your Ticket to Tax Savings in 2023

Section 179 refers to a section of the U.S. Internal Revenue Code that allows businesses to deduct the cost of certain types of equipment and property as an expense, rather than depreciating it over time. According to the official website of Section 179, here is what you need to know about the 2023 Section 179 from a bird's eye view:

  • 2023 deduction limit is $1,160,000 | The deduction is good on both new and used equipment. To utilize the deduction for this year, equipment must be financed or purchased and used between January 1 - December 31, 2023

  • 2023 spending cap on equipment purchases is $4,050,000 | This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis.

  • Bonus depreciation: 8-% for 2023 | Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached. The Bonus Depreciation is available for both new and used equipment.

This deduction is often used to incentivize small businesses to invest in capital assets and stimulate economic growth. Here's how it relates to equipment finance and lease agreements:

  1. Equipment Purchase: Section 179 primarily applies to equipment that businesses purchase for their use. This can include machinery, vehicles, computers, office furniture, and other tangible property used in the operation of the business.

  2. Deduction Limit: Under Section 179, businesses can deduct the cost of qualifying equipment as an expense in the year they place it into service, rather than depreciating it over several years. The deduction limit can change from year to year based on tax laws and inflation adjustments.

  3. Lease Agreements: Equipment finance and lease agreements can also be related to Section 179. When a business leases equipment, they may still be able to take advantage of Section 179 deductions if the lease meets certain criteria. In some cases, the lessee (the business leasing the equipment) can still qualify for Section 179 deductions if the lease is considered a "capital lease" rather than an operating lease.

  4. Qualifying Property: Not all types of property are eligible for Section 179 deductions. The property must be used for business purposes more than 50% of the time. Certain types of property, like real estate, are generally not eligible for Section 179 deductions.

  5. Annual Investment Limit: In addition to the deduction limit, Section 179 has an annual investment limit. If a business purchases more than a certain total dollar amount of qualifying property in a tax year, the deduction limit may be reduced on a dollar-for-dollar basis. This threshold can also change from year to year.

  6. Economic Impact: The Section 179 deduction is intended to stimulate economic activity by encouraging businesses to invest in new equipment and technology. It can provide financial relief by reducing taxable income in the year the equipment is placed into service.

In other words, Section 179 is your golden ticket to substantial tax savings! Imagine deducting up to $1,050,000 in equipment costs right now, not over several years. That's cash back in your wallet that can be put toward other growth initiatives. Section 179 is a limited-time offer. As the saying goes, "Seize the day!" Consult with our experts today, and let us guide you through the process, ensuring you grab every dollar you're entitled to. Contact to get in touch!


bottom of page