For many businesses, tax season can be the most stressful time of the year. Fortunately, there are technology tax deductions out there, including Section 179. Not only can this deduction help businesses save on expenses — it can also help them grow.
The Section 179 tax deduction allows all businesses to deduct the full purchase price of qualifying equipment or software bought, financed or leased during the tax year from their gross income. This deduction helps ease tax burdens (especially for small businesses) and encourages companies to remain competitive in their market by buying the new technology they need.
Let’s explore how you can take advantage of Section 179 for the remainder of the year.
1. What Products Qualify?
Luckily, most tangible goods used by American businesses qualify for technology tax deductions. These include:
There’s no need to put off buying new equipment for your office until the end of the year. Instead, you can make the necessary investment at any point and still reap the benefits provided by the U.S. government.
Section 179 does come with a few limitations. The first is that qualifying equipment and software must have been purchased, financed or leased between January 1st, 2022, to December 31st, 2022.
Secondly, the items must be used for business purposes more than 50% of the time. To determine the monetary amount eligible for technology tax deductions, simply multiply the cost of the qualifying product by the percentage of business use.
Lastly, the amount you can deduct for 2022 stands at $1,080,000. This also limits the total amount of equipment purchased to $2,700,000 in order to qualify. After this limit, the amount phases out dollar for dollar, or the deductible amount begins to decrease.
Once you know which products you can deduct within your limit, you can start the deduction process. When you do your taxes, you will use Part 1 of Form 4562 to claim your deduction. On this form, you’ll list the qualifying products and their costs up to the deduction limit.
With technology tax deductions like Section 179, your business can feel more confident that the new technology you invest in maximizes your costs. And, by using the most cutting-edge technology, you can transform your business operations to be more efficient, productive and in line with the modern work experience.
If you’re interested in learning more about what technology your business could benefit from and help you qualify for year-end savings, consult our IT experts. We can help ensure you don’t miss out on savings and leverage the best equipment out there.
If you want to learn more about IT tools and strategies, check out additional blogs in our resources section.
The information provided in this blog is for educational purposes only. Consult your tax professional for information on how Section 179 may relate to your business.
