Tax Benefits

What is the Section 179 Deduction?

Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.

Several years ago, Section 179 was often referred to as the “SUV Tax Loophole” or the “Hummer Deduction” because many businesses have used this tax code to write-off the purchase of qualifying vehicles at the time (like SUV’s and Hummers). But that particular benefit of Section 179 has been severely reduced in recent years (see ‘Vehicles & Section 179‘ for current limits on business vehicles.)

However, despite the SUV deduction being lessened Section 179 is more beneficial to small businesses than ever. Today, Section 179 is one of the few government incentives available to small businesses and has been included in many of the recent Stimulus Acts and Congressional Tax Bills. Although large businesses also benefit from Section 179 or Bonus Depreciation, the original target of this legislation was much-needed tax relief for small businesses – and millions of small businesses are actually taking action and getting real benefits.

Here’s How Section 179 Works:

In years past, when your business bought qualifying equipment, it typically wrote it off a little at a time through depreciation. In other words, if your company spends $50,000.00 on a machine, it gets to write off (say) $10,000.00 a year for five years (these numbers are only meant to give you an example).

Now, while it’s true that this is better than no write-off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it.

And that’s exactly what Section 179 does – it allows your business to write off the entire purchase price of qualifying equipment for the current tax year.

This has made a big difference for many companies (and the economy in general). Businesses have used Section 179 to purchase needed equipment right now, instead of waiting. For most small businesses, the entire cost of qualifying equipment can be written off on the 2022 tax return (up to $1,050,000.00).

Example Calculation Using the Section 179 Calculator:

Using a $75,000.00 equipment cost for a sample calculation shows how taking advantage of the Section 179 Deduction can significantly lower the true cost of the equipment purchased, financed or leased. In our example, $75,000.00 in equipment purchased has a true cost of $48,750.00. That’s $26,250.00 saved. Would you like an extra “25 grand-plus” this year on equipment you needed anyway?

In order to qualify for the Section 179 Deduction, the equipment must be purchased, financed or leased equipment and put into service by December 31 of this year!

Questions?

Visit https://www.section179.org

What is ADA Section 44?

The Americans with Disabilities Act (ADA) Section 44 of the IRS tax code allows businesses to save 50% on your purchase.

Make Sure You Qualify!

Do you have:

• Total revenues of $1,000,000 or less in the previous tax year?

• or 30 or fewer full-time employees?

Want to learn more about how you can save on equipment purchases with the ADA Tax Credit?

1. Download IRS Form 8826 Disabled Access Credit

2. Complete form

3. Submit with your federal tax filings

Small Business Tax Credit

Internal Revenue Code Section 44: Disabled Access Credit

The Americans with Disabilities Act includes several provisions aimed at making businesses more accessible to people with disabilities. Customers who purchase products featuring electric power elevation are often eligible for this tax credit.

The tax credit, established under Section 44 of the Internal Revenue Code, was created in 1990 specifically to help small businesses cover ADA-related “eligible access expenditures.” A business that for the previous tax year grossed less than $1,000,000 in revenue or who employed fewer than 30 full-time workers is an “eligible small business” for the Disabled Access Credit.

The Disabled Access Credit is equal to 50% of the “eligible access expenditures” which exceeds $250 but does not exceed $10,250, for a maximum credit of $5,000 a year.

Tax Credit Example:

An elevation table can be used for a tax credit because it allows easier access for patients with disabilities and for this example we will use a table that costs $5,000. We will subtract $250 because the “eligible access expenditure” must exceed $250. This leaves a balance of $4,750. Then 50% of $4750 is $2,375 (tax credit).

Purchase Price: $5,000.00

Expenditure: ($250.00)

Subtotal: :$4,750.00

50% Tax Credit: ($2,375.00)

Net Cost after ADA Credit: $2,625.00