We would like to remind our customers of Section 179 of the United States Internal Revenue Code (26 U.S.C. § 179). This deduction is good on new and used equipment, as well as off-the-shelf software. To take the deduction for tax year 2021, the equipment must be financed or purchased and put into service between January 1, 2021 and the end of the day on December 31, 2021. This means that small businesses that purchase up to $2.6 million in qualifying equipment can deduct up to $1,150,000 from their taxes. 

A $2,620,000 Spending Cap has been established so that Section 179, which was created with the intent of specifically helping small businesses, literally only applies to them. This amount is the maximum that can be spent on equipment before the deduction begins to be reduced on a dollar for dollar basis. Businesses that spend more than $3,670,000 on equipment don’t qualify for the deduction.

In addition, a Bonus Depreciation of 100% is extended through 2021, and is available for both new and used equipment. This is generally taken after the Section 179 Spending Cap is reached.

Here is an example of how Section 179 would work:

To learn more, visit Section179.org, or give us a call and find out how you can deduct your next metalworking machine!

385-271-6718 | Sales@BudsEquipment.com