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Invest in your IT by Leveraging This Tax Deduction

By:Christine Fettinger

Section 179With 2017 wrapping up, the time to take advantage of tax incentives to help your business are running out too. If you are looking at 2017’s budget and realizing you have some extra money left over, Section 179 could be a smart way to upgrade your IT infrastructure and receive significant tax breaks.

Investing in new technology is integral to keeping your business competitive and successful, and this deduction can help with that.

What is Section 179?

Section 179 of the IRS tax code allows business to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. It can help small and medium-size businesses like yourself invest in new technology.

2017 Section 179 Information:

  • 2017 Deduction Limit: $510,000
  • 2017 Spending Cap on equipment purchases: $2,030,000
  • Deadline: December 31, 2017

Essentially, this means that for 2017 a business can write off up to $510,000 and limits the total amount of equipment purchased to $2,030,000. In order to take the deduction for the 2017 tax year, the equipment must be financed/purchased and put into service by midnight on December 31, 2017. The deduction limits and spending caps change each year, so there are no guarantees next year’s deductions will be as good.

Technology that may qualify for the Section 179 deduction is:

  • Servers, server upgrades, printers, scanners
  • Routers, network switches, network security appliances
  • Computers, laptops, tablets
  • Windows 10, Office 365,
  • Other ‘off the shelf’ software can qualify provided it is not custom designed and available to the general public

Both new and used equipment can qualify for the Section 179 deduction as well as leased or financed equipment. Almost all types of ‘business equipment’ that your company buys or finances can qualify for this deduction.

A handy calculator here can also help you see how much you can save on new equipment with this deduction.

For more information on Section 179, visit https://www.irs.gov/publications/p946 and scroll to the ‘Electing the Section 179 Deduction’ section.

Please keep in mind that although we are a team of trusted IT professionals, we are not tax professionals. While we can offer you our advice, you should direct any questions about the finer points of Section 179 to your CPA or tax attorney.