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Section 179 What You Need To Know About the Small Business Tax Deductions

Many small business owners are familiar with the tax laws and what taxes small businesses are required to pay. However, what few business owners are aware of is something called Section 179.

Section 179 expands to a tax deduction limit of $1,000,000 and will be left that way until further notice. This tax break is intended to make it easier for small business owners to buy the equipment that their company needs to continue their operations. Section 179 helps make this possible by allowing small businesses to deduct up to $1,000,000 in qualifying machinery and equipment off of their taxes.

While Section 179 is not new, the amount businesses are allowed to deduct has gone up and down over the years. In the beginning, limits were a mere $10,000 but Congress raised that limit over time to a new all-time high today of $1,000,000. The raises are meant to help small businesses purchase the equipment they need to keep growing and expanding while stoking company growth to help create more jobs and jumpstart the economy.

What Purchases Qualify for Section 179?

The next question many people are asking is related to what equipment purchases are allowed to be fully written off of taxes according to Section 179. The following types of equipment are allowed to be fully written off according to Section 179 of the small business tax deduction:

  • computers
  • software
  • office furniture
  • business equipment
  • machinery
  • business vehicles (must weigh at least 6,000 pounds)

Section 179 also allows you to deduct the cost of properties off of your taxes as long as they are used at least 50% of the time for business-related functions.

What Does NOT Qualify For Section 179 Deductions?

There are also some purchases that do not qualify for Section 179 deductions. Some of those deductions that do not count off of your taxes include:

  • inherited property obtained from an organization you control or purchase from a relative
  • personal properties converted to use for business but that is used for business less than 50% of the time
  • land and other permanent structures
  • furnaces and air conditioning units
  • properties that are meant for use anywhere outside of the US
  • intangible properties such as copyrights and patents

These are unacceptable tax deductions according to the Section 179 small business code. These will not be able to be taken off of your business’s taxes to lower the amount that is due for your taxes.

Conclusions

Section 179 has never been friendlier to businesses and has never given more tax deductions to those who are trying to buy equipment and machinery to outfit and grow their business. Take advantage of these write-offs while they are here and if you have wanted to purchase new machinery or equipment for your business, act while the tax deductions are here and have never been available in higher amounts.

For more information about small business tax deductions that your business may able to use please feel free to contact us at WheelHouse IT for further assistance!

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