By: Melisa Tooke | October 24, 2017
It’s that time of year again. End of Year planning. It’s always wise to review your current equipment and business practices to make sure you are taking full advantage of hardware and software advancements. The end of the year is particularly good time to upgrade hardware and software because you can take advantage of Section 179 tax deductions to decrease tax payments and increase cash for other needs.
Section 179 encourages small business owners to invest in equipment or technology by allowing them to deduct the asset’s value during the first year. When you acquire new equipment such as hardware or software, you may deduct the first $500,000 of the value during the first year of ownership.
For example, let’s say you purchase $10,000 worth of new hardware or software during December. Your Section 179 deduction would be the full $10,000. If your combined federal and state tax bracket is 38 percent, your tax savings would be $3,800 and therefore your net equipment cost would be $6,200 because you keep the $3,800 that you would have otherwise paid in taxes.