Section 179 Tax Benefits Increase in 2013

With the recent approval of the fiscal cliff deal, significant changes have been made to the Section 179 tax deduction for 2013. The deduction limit was scheduled to drop this year; however, large tax savings are still available for your business in 2013.

What is Section 179?

Section 179 of IRS Code allows businesses to deduct, rather than depreciate, the costs of assets acquired for business use as expenses in the year the equipment is purchased. That means instead of deducting the cost of a piece of equipment over a number of years, your business can write off the entire purchase price in the year it is acquired and put into service.

The Section 179 tax deduction in 2013 allows companies to deduct up to $500,000 worth of equipment purchased for business use. Also available is a bonus depreciation that allows businesses to take a deduction for equipment purchases beyond the amount allowed under Section 179. This bonus depreciation is set at 50%, with a maximum combined deduction of $2,000,000.

This tax deduction increase is great news for business owners. In 2012, the tax deduction limit was set at $139,000 and was actually scheduled to drop to $25,000 in 2013. There is no better time for you to acquire equipment for your business.

Equipment that qualifies for the Section 179 deduction includes:

  • Computers
  • Computer software
  • Equipment purchased for business use
  • Office equipment and furniture

Learn more about Section 179.

 

 

Not every business will receive the same benefits from the Section 179 deduction and bonus depreciation. It is important to consult with your tax advisor because every business has its own unique financial situation.