Section 179 yet again

By | August 31, 2011

Maximum  section 179 DeductionI just realized I’ve gone a few months without a Section 179 post, which is rather un-Fletch like. Because as much as I love equipment financing, I really love Section 179 – I think it’s the greatest tool for business since… well… ever, really. I mean, think about it – the government will actually give you back money because you bought something you needed anyway.

To reiterate something important, Section 179 was not just renewed for 2011 – it was enhanced.  Many of us thought it would go away, but instead (like a good horror movie villain) it came back bigger and stronger. Jason and Freddie have nothing on Section 179.

Here are a few finer points of what Section 179 can mean for you this year:

  • The Maximum Deduction is now $500,000. This is almost double what it recently was. Could you use a $500,000 deduction? Yes? Then go buy some equipment.
  • Do you need more than 500k in equipment? No problem. There’s a bonus first year depreciation, and it’s 100% after the $500,000 deduction is reached (this is up from 50% previously).
  • Total amount of equipment purchased can be $2,000,000 (that’s two million dollars). Needless to say, for most of us, that’s a LOT of equipment.
  • The deduction decreases on a dollar for dollar basis after the $2,000,000 cap is reached. This means it’s a true small to medium business deduction – if you are buying 10 billion worth of equipment a year, Section 179 won’t help you. But for most of us, it’s a HUGE deal.


So how huge of a deal can this be? Look at the graphic on the right and see how a purchase of 650k of equipment really only costs $422,500.

Not bad, huh? Now here’s another neat thing: if you FINANCE the equipment (or lease it), this can actually be profitable this year. Because the $227,500 you save on your taxes is probably more than your finance payments for the year. That means it’s profitable to combine Section 179 and an Equipment Lease.

But like I said a few posts ago, time is running out. It’s late summer – we’re getting into “year end” pretty quickly. So if you haven’t yet, now is the time to start thinking about Section 179 (and some equipment financing as well.)

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