Section 179 Tax Benefits For 2022
By Renée Lauzon-Martin - General Manager, HDD Broker LLC - December 19, 2022
Your $150,000 drill purchase may only cost you $97,500 (after $52,500 in tax savings)! Buy before December 31st!
What is the Section 179 deduction?
Section 179 of the IRS tax code allows businesses to deduct the FULL PURCHASE PRICE (up to $1.08 million dollars in 2022) of qualifying NEW or USED equipment (such as company vehicles, machinery or software) from your gross income. It's an incentive created by the US government to encourage businesses to buy equipment, stay competitive, and invest in themselves.
Who qualifies for the Section 179 deduction?
All businesses that purchase, finance, or lease less than $2,700,000 in new or used business equipment during 2022 qualify.
Are there limits to Section 179 deductions?
There are caps to the total amount written off ($1,080,000 in 2022), and limits to the total amount of the equipment purchased ($2,700,000 in 2022).
Sample Calculation*:
| Example #1 | |
| Cost of equipment | $150,000 |
| 1st year write-offs: Section 179 Deduction | $150,000 |
| Total 1st year Deduction: | $150,000 |
| Savings on Purchase (assumed 35% tax) | $52,500 |
| Bottom line equipment cost (after tax savings) | $97,500 |
| Example #2 | |
| Cost of equipment | $700,000 |
| 1st year write-offs: Section 179 Deduction | $700,000 |
| Total 1st year Deduction: | $700,000 |
| Savings on Purchase (assumed 35% tax) | $245,000 |
| Bottom line equipment cost (after tax savings) | $455,000 |
*Click here for the fully updated Section 179 Calculator for tax year 2022
*Please consult your tax advisor for details regarding Section 179 benefits and limitations. For more information, please visit http://www.section179.org
This commentary is presented for informational purposes only. It is not intended to be a comprehensive or detailed statement on any subject and no representations or warranties, express or implied, are made as to its accuracy, timeliness or completeness. Nothing in this commentary is intended to provide financial, legal, accounting or tax advice nor should it be relied upon. Neither HDD Broker LLC nor the author is liable whatsoever for any loss or damage caused by, or resulting from, any use of or any inaccuracies, errors or omissions in the information provided.