Tax Savings
FAQ
All businesses that purchase, finance and/or lease new or used business equipment during tax year 2022 may qualify for the Section 179 Deduction.
Most tangible goods used by your business, including off-the-shelf software and business use vehicles (with some restrictions) qualify for the Section 179 Deduction.
Also, to qualify for the Section 179 Deduction, the equipment and/or software purchased or financed must be placed into service between January 1, 2022 and December 31, 2022.
Bonus depreciation for 2022 is 100%.
Bonus Depreciation is useful to very large businesses spending more than the Section 179 Spending Cap (currently $2,700,000 for 2022). Also, businesses with a net loss will qualify to deduct some of the cost of new equipment and carry-forward the loss.
When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation – unless the business had no taxable profit, because the unprofitable business is allowed to carry the loss forward to future years.
Section 179 does come with limits – there are caps to the total amount written off ($1,080,000 for 2022), and limits to the total amount of the equipment purchased ($2,700,000 in 2022). After that, the deduction begins to phase out on a dollar-for-dollar basis which is what makes it a true small business deduction.
(assuming a 21% tax bracket)