Staying competitive as a business requires constant investment in new technology, equipment, and resources. While the cost of these upgrades can be daunting, especially for small and medium-sized enterprises, Section 179 of the Internal Revenue Code offers an opportunity for businesses to lower their taxable income by deducting the full purchase price of qualifying equipment and technology. At Allied Business Solutions, we are dedicated to helping clients understand and leverage Section 179, ensuring they maximize their savings and make well-informed technology investments.
What is Section 179, and How Can It Benefit Your Business?
Section 179 is a tax deduction that allows businesses to deduct the full purchase price of qualifying equipment and technology in the year it was purchased rather than over several years. This provision in the Internal Revenue Code was designed to encourage businesses to invest in growth-driving assets, such as new technology and essential equipment, by providing a substantial upfront tax benefit.
Under Section 179, equipment acquired through a $1 purchase option lease or an Equipment Finance Agreement (EFA) also qualifies, allowing businesses to enjoy immediate tax savings without significant upfront cash outlays.
For businesses, the advantages of Section 179 go beyond reducing tax liability. By accelerating deductions, companies can improve their cash flow, invest in more advanced equipment, and enhance overall operational efficiency.
.jpg)
Qualifying Business Technology Purchases Under Section 179
To take full advantage of Section 179, it’s essential to understand which technology purchases qualify. In general, any tangible property purchased or financed for business use during the tax year is eligible for deduction. For most businesses, this includes a broad range of technology and equipment that supports productivity, efficiency, and communication.
Typical qualifying purchases include computers, software, printers, servers, and telecommunications systems. Additionally, Section 179 extends to many types of office equipment, such as multifunction copiers, projectors, and enterprise-level network systems.
The total deduction allowed under Section 179 is subject to an annual cap, which changes periodically based on legislative updates. Additionally, the deduction is only available for items used predominantly for business purposes. This means that equipment or technology with both personal and business uses may not qualify for the full deduction if personal use is significant.
Explore Qualifying Equipment
How to Leverage Section 179 to Boost Your Bottom Line
When properly utilized, Section 179 can be a game-changer for your business's finances. Start by reviewing your current technology needs and identifying areas where upgrades or expansions are needed. Next, calculate how much you’ll spend on these qualifying purchases and estimate the potential tax savings Section 179 offers. This approach will give you a clearer picture of how much you can save and help you prioritize essential technology investments.
For businesses that want to spread out payments, a $1 purchase option lease or Equipment Finance Agreement (EFA) can be a smart financing choice. These options allow you to deduct the full purchase price of equipment as though it were bought outright, making it easier to finance larger technology investments without tying up your working capital.
Timing is also an important factor to consider when leveraging Section 179. Since the deduction applies only to equipment purchased and put into service within the tax year, it’s beneficial to complete any planned purchases before the year ends. This way, you can ensure the tax benefits apply to your current return and accelerate your savings timeline. Many businesses find that the savings generated from Section 179 enable them to reinvest in other growth areas, from hiring additional staff to expanding their service offerings.
.jpg)
Maximize Your Section 179 Savings with Allied’s Office Technology
Allied Business Solutions offers a range of office technology that qualifies for Section 179 tax benefits. From multifunction printers to advanced software, our solutions enhance efficiency while providing tax-saving opportunities. Learn how our technology can support your goals and maximize your Section 179 deductions.
Section 179 Tax Benefits