Section 179 of the IRS tax code can allow your business to deduct technology investments to recoup some or all of the cost. It is a provision that allows you to expense the cost of qualified technology investments rather that depreciate.
Here’s how it works:
- Most small business owners are eligible to write off up to $500,000 worth of equipment.
- Any qualified purchases that exceed $500,000 are eligible for a bonus depreciation which accommodates a deduction up to 50 percent of the cost.
- However if your company makes more than $2 million in purchases you will lose the full benefit of the deduction at a rate of one less dollar allowed for every dollar spent past $2 million.
- Most technology investments and new and used equipment is eligible for the deduction as long as it is used for business purposes 50 percent of the time.
- Eligible equipment includes a wide range items from computers and software to machinery and office equipment.
Section 179 is designed to help small businesses keep up with the rate of change in technology. Because technology doesn’t have the same kind of asset depreciation as furniture this provision helps owners use tax breaks to keep up with the bigger businesses.
The provision nearly dropped from the rate of $500,000 it maintained from 2010-13 to a much smaller amount of $25,000 in 2014-15. However the Expiring Provisions Improvement Reform and Efficiency Act of 2014 on April 3, 2014 continued to allow the $500,000 limit. The current stature will expire again in 2016 should further legislation not continue to support it.
Section 179 presents a tremendous opportunity for small businesses to make investments that will be to their benefit for years to come.
To learn more about Section 179 and how you can use it to augment your business’s buying power, contact the IT professionals at Sydney Technology Solutions. They can be reached at (02) 8212 4722 or by sending an email to [email protected].