Section 179 Raises the Maximum Tax Deduction to $500,000 for Equipment Purchases for Small Businesses
Everyone knows the old saying ‘the only thing that’s inevitable is death and taxes.’ Sad to say, it’s a life truth. And it’s a particularly common theme in the first part of the year as we all get ready to file. But this year, taxes don’t have to be quite so inevitable. That’s because of a substantial change that came as a result of all the discussions characterized as ‘the fiscal cliff.’
Small businesses are a vital – some might say – THE vital – part of this country’s economy, and as a result, Congress provided a substantial benefit for those businesses purchasing equipment. Let me say here, it was not a new benefit, but it turned out to be a significantly enhanced one.
Section 179 in the IRS tax code allows businesses to deduct a certain amount of the cost of equipment that is purchased and installed during the year. In 2012, for instance, this amount was up to $139,000, and it was scheduled to drop to $25,000 in 2013. But instead of phasing out this deduction, the new act raises the maximum to $500,000 for equipment purchased and installed by December 31. What’s more, they made this retroactive to equipment purchased during 2012 for the 2012 tax year. This could be a substantial savings for the average small business, especially since most equipment purchases are well below these levels. So, many will be able to deduct the full amount of their equipment purchased this year. And that means there’s opportunity for a lot more companies to replace, upgrade, or expand this year.
Now it is always a good idea to consult a tax advisor on these issues, because there are some rules and limitations. But once again, the list of eligible equipment is very long, and as a rule of thumb we could say that it is likely that the equipment used in most businesses is eligible – from software to vehicles.
We talk to hundreds of owners every day about what they need to operate and grow their businesses. So imagine the delight of being told that the equipment they purchase will end up being less costly than they have planned. Don’t let the raw cost of equipment stand in the way of an opportunity to grow your business. In the end, it may turn out to be a lot less expensive than it appeared at first. Section 179 of the tax code could save your small business up to $500,000 on equipment purchases; don’t delay, contact National Funding today to find out how much your business could save in 2013.