Write-Off $1,160,000 in Equipment with Section 179 Tax Deduction*
$1,160,000 Write-off
Section 179 Federal Tax Deduction: This deduction allows a company to deduct the first $1,160,000 of equipment used in the company’s trade or business (Section 179 Property) acquired in tax years beginning in 2023 from their taxable income. For companies acquiring up to $2,890,000 of equipment in tax years beginning in 2023, this deduction is available in full. It then phases out on a dollar-for-dollar basis for amounts over $2,890,000. The deduction limit and acquisition limit are inflation-adjusted and may change for tax years beginning after 2023. A company’s Section 179 Federal Tax Deduction is limited to the company’s taxable income for the tax year that is derived from the company’s active conduct of any trade or business during that tax year. Financing or leasing with a $1 buyout qualify.
Bonus Depreciation
In addition to the Section 179 Federal Tax Deduction, after exceeding the $1,160,000 write-off, businesses can also take bonus depreciation on both new and used qualifying equipment in an amount equal to the bonus depreciation percentage for the tax year multiplied by the equipment’s depreciable basis. The bonus depreciation percentage for qualifying equipment acquired after September 27, 2017 is 80% if the equipment is placed in service in 2023 and is reduced by 20% for each tax year the equipment is placed in service after 2023. Financing or leasing with a $1 buyout qualify.
Standard Depreciation
In addition to the $1,160,000 write-off and bonus depreciation, companies may be eligible to deduct federal depreciation based on the depreciable basis of their qualifying equipment, state depreciation, local tax incentives and interest expenses. Financing or leasing with a $1 buyout qualify.