There were big changes last week in section 179 of the US Tax code.
If you recall, that’s the Hummer tax break that I wrote about here. Essentially, it allows a business to buy equipment and write off the entire amount (up to certain limits.)
Well, last week, the Economic Stimulus Act of 2008 went into effect. You have probably heard of this act & it’s the one where almost everyone is getting a $600 check from good old Uncle Sam (far and away my favorite uncle when things like this are involved.)
However, taxpayers aren’t the only ones benefiting. Included in the Act are provisions for businesses, including raising the limits on Section 179, and adding a big depreciation write off once those limits are reached. Previously, the cap on equipment purchase deductions was $128,000, and the total cost of equipment purchased could not exceed $510,000. The Economic Stimulus Act of 2008 has almost doubled the deduction cap, to $250,000, and raised the overall total cost to $800,000.
Essentially, the message to businesses is this: Buy or Lease equipment.
And the message is a strong one. At no time has it been better to invest in your business. Check this example out (assumes your business buys 400k of qualifying equipment.)
It’s pretty easy to see why this is a big deal. 400k of equipment can be had for 281k. I don’t know about you, but I can’t recall the last time my uncle gave me one hundred and nineteen thousand dollars. I do recall some old socks, but that’s not the same thing.
If you’re interested in seeing how much you can save, there are several online section 179 tax calculators that can help you see the benefit to your business.