Many of our clients rely on this tax incentive each year to provide them with the ability to purchase or update the technology that runs their business. Utilized by many for licensing, software packages, servers, routers, and switches, many of our clients have leveraged Section 179 as an invaluable asset for the innovation and management of their network infrastructure.
Below is an overview of the section 179 tax incentive for 2018, including deduction limits and bonus depreciation. Originally used by innovators and investors to further the (their) businesses’ technology goals, many of our clients rely on this credit for the larger items in their technology scope.
2018 Deduction Limit = $1,000,000 (one million dollars)
The initial deduction is good for purchasing new technology equipment or off-the-shelf software. To take the deduction successfully in 2018, the equipment must be purchased or financed and put into service between January 1, 2018, and December 31st, 2018.
2018 Spending Cap on equipment purchases = $2,500,000
The maximum amount that can be spent on equipment, before the small business tax incentive is affected, is $2.5 Million to $3.5 Million. Most businesses looking to qualify for the tax incentive doing $2.5 Million in technology spending don’t meet the needs of a small business.
Bonus Depreciation: 100% for 2018
An additional bonus to close out the year-end budgeting for 2018, bonus depreciation is generally taken from the spending cap that a business reaches and is available for both new and used equipment.
What’s the Section 179 Deduction?
Most small to medium-sized businesses in the San Francisco Bay Area think the Section 179 Tax Deduction is some mysterious or complicated tax code that you’ll need an accounting or financial firm to clear. Essentially, Section 179 is the IRS tax code that allows businesses to deduct the full purchasing price of qualifying equipment and/or software purchased or financed during the tax year. This incentive was created to encourage businesses to invest in themselves and update vulnerable technology.
Currently, Section 179 is one of the few incentives available to small and medium-sized businesses. Large businesses also benefit from Section 179 for Bonus Depreciation. Join the millions of SMBs that have begun taking action and get your team real benefits.
Here’s How Section 179 works:
In the past, businesses would purchase IT equipment, typically writing off some through depreciation. While this writes off was better, it wouldn’t be until 2018 that the government would include the write-off of all qualified equipment purchases for the same year your IT equipment was purchased. Making a big splash so far, many of the companies looking to move to the cloud or replace an older exchange server would qualify to write-off on the 2018 Tax Return up to $1 million.
Limits of Section 179
- 2018 Cap to the total amount of write-offs is $1 Million
- Amount of technology equipment purchased $2.5 Million
- Dedication phases out on a dollar-for-dollar basis after $2.5 Million is incurred and goes away at $3.5 Million.
Who Qualifies for Section 179?
Businesses looking to purchase, finance, or lease new or used business equipment during the 2018 tax-year qualify. Most of the tangible goods purchased through Section 179 and must be placed into service no later than December 31, 2018.
If your business is looking for ways to save on technology spending, look no further. With over 30 years of experience serving the San Francisco Bay Area, our seasoned staff knows just how to get you the technology you need. If you wish to price it out, visit the Section 179 Calculator.
Not sure what you might need? Sourcing-out gaining desktops or mail-servers are always at the top of an SMBs list. If you need assistance in discovering and identifying technologies that could benefit your business, contact us today to speak with one of our many experts.
