Many small businesses have taken advantage of the Section 179 tax deductions, which have given significant breaks to owners who want to get new equipment to keep the company humming along. Even with the changes effective this year, it remains one of the best tax deducations out there, and one you need to explore if you’re even thinking about purchasing a new freezer for your restaurant.
As I mentioned, though, there’s changes to the formula. Let’s do this good news, bad news style.
The Good News About Section 179
It still exists, which is a plus. You can also deduct up to $560,000 in total equipment and the deduction limit is at $139,000, which is still a significant sum of money. It remains, in other words, extremely useful.
Those totals are only intact for this year barring legislative action at the federal level, so it’s important you don’t turn your nose up at those savings. It can help your business get through the year, and allow you to more than pay back any equipment financing you need to get that new death ray. I’m assuming, in this example, that you run a world domination small business.
The Bad News About Section 179
Those totals are a lot less than they have been in years past, and there’s really no way to sugarcoat that. If you went for a Section 179 tax deduction last year, you probably noticed that the deductions have been more than slashed in half. If you were ramping up for big purchases in 2012, you can no longer count on such a cushy tax deduction when you get them.
That’s a bummer.
This is a trend that is going to continue, as I mentioned. The tax deduction total is slated to fall all the way down to $25,000 in 2013, which would really put a dent in your deductability, assuming that’s a word.
So what’s the takeaway for your business? Go hard for equipment this year despite the drop. Next year will likely be worse.
Share your thoughts on Section 179 tax deductions in the comments.