Tax Benefits of Buying Equipment & Software Before December 31, 2022
It’s almost the end of the year 2022 and the start of a new year. Your company will want to take stock of potential tax write-offs available to your company before the year ends. One of those tax write-offs is under IRS Section 179 which allows you to write-off up to $1,080,000 for equipment or software and thereby reduce your tax liability.
It’s an opportunity to reduce your taxes while getting essential equipment for your business. You can start the new year by upgrading your business assets or expanding to increase your business while reducing your overall tax liability for 2022.
Check with your accountant or tax professional to see what tax write-offs are available to you. Depending upon your top tax bracket, you could write off a substantial portion of the purchase price of new equipment or software.
Section 179 Tax Write-Offs
The tax write-off under IRS Section 179 applies to most types of business software and equipment including:
- Subscription Software such as ERP, CRM, HR and most types of “out-of-the-box” software
- Construction equipment
- WISP / Wireless Internet Service Equipment
- Computers and Server Equipment
- Security Equipment
- Hospital and Lab Equipment and Furniture
- Landscaping & Tree Services Equipment
- Brewery Equipment
- Manufacturing and Robotics Equipment
This list is not exhaustive. Pretty much any business asset is covered under IRS Section 179. There are some exceptions of course but IRS Section 179 is pretty expansive. This tax benefit was designed to help small and medium-sized businesses to invest in themselves and to succeed.
Take advantage of it before December 31, 2022 if you want the tax benefits.
If you don’t want to impact your cash flow, you can finance the software or equipment purchase with a financing company such as Dimension Funding. You make monthly payments over the lifetime of the asset, generally up to 60 months. As an added bonus, you may qualify for a 90 days deferment before you have to make your first monthly payment. Your new equipment can be earning you money for 90 days before you make your first monthly payment. With the tax write-off, it might be a good idea to purchase any needed business equipment or software before January 1, 2023.
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