Section 179 Tax Deduction for 2022 | New Castle DE

Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income.  See 'Vehicles & Section 179' for current limits on business vehicles. 

Here's How Section 179 works: 

Section 179 allows your business to write off the entire purchase price of qualifying equipment for the current tax year. This has made a big difference for many companies (and the economy in general.) Businesses have used Section 179. Purchase needed equipment right now, instead of waiting. For most small businesses, the entire cost of qualifying equipment can be written-off on the 2022 tax return (up to $1,080,000).

Section 179 at a Glance for 2022:

Limits of Section 179: 

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). The deduction begins to phase out on a dollar-for-dollar basis after $2,700,000 is spent by a given business (thus, the entire deduction goes away once $3,780,000 in purchases is reached), so this makes it a true small and medium-sized business deduction.

Who Qualifies for Section 179? 

All businesses that purchase, finance, and/or lease new or used business equipment during tax year 2022 should qualify for the Section 179 Deduction (assuming they spend less than $3,780,000).

Most tangible goods used by American businesses, including "off-the-shelf" software and business-use vehicles (restrictions apply) qualify for the Section 179 Deduction.

For basic guidelines on what property is covered under the Section 179 tax code, please refer to this list of qualifying equipment. 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.

For 2022, $1,080,000 of assets can be expensed; that amount phases out dollar for dollar when $2,700,000 of qualified assets are placed in service.

This page was designed to answer your questions regarding the Section 179 Tax Deduction, and to explain the impact the various Stimulus Acts have had on Section 179. The information on this site will clearly explain the Section 179 Deduction in plain terms; will go over what property qualifies under Section 179 for the deduction; and will explore the myriad of ways the Section 179 deduction can impact your bottom line. In addition, there are IRS tax forms and also tools for you to use, such as the free Section 179 Deduction Calculator currently updated for the 2022 tax year.    

Please go to https://www.section179.org/ for full details about Section 179.

* Please consult your tax professional to confirm eligibility.