If You Own A Small Business, It Is A Good Idea To Become Familiar With This Tax Provision


Want to learn how the Section 179 tax deduction can benefit your business? Are you wondering what the deduction limit is going to be next year? You’ll find everything you need to know about this business-friendly tax benefit right here. Allied Capital Group makes a point of staying on top of the latest developments in order to provide our customers and prospects with the up-do-date information they need, including a Section 179 info-graphic. If you own a small business, it is a good idea to become familiar with this tax provision. Doing so will help you better plan for your company’s immediate and long-term future when it comes time to make capital investments.
Allied Capital Group is an equipment financing company, not an accounting firm, but we are fully knowledgeable of all aspects of the Section 179 tax provisions. We’ve created a variety of content that can help you better understand it, but we recommend that you consult with your accountant or tax professional to find out your individual business deductions are.
The Protecting Americans from Tax Hikes Act of 2015 (PATH) was signed in late December 2015 by President Obama. The new deduction limit has increased to $500,000 for qualifying equipment, so don’t wait to get the new or upgraded business equipment you need. Additionally the bill extends bonus depreciation for equipment bought and placed in service during 2015-2019.


Section 179 Tax Deduction Limit For 2017

If you own a business, one of the most important tax codes you need to be familiar with is Section 179. It lets you deduct the purchase price of many types of equipment that is used for business. Over the years, this tax code has helped entrepreneurs and long-established business owners throughout the country write off a big portion of their equipment and technology purchases, thereby enabling them to save their cash. The Section 179 tax deduction limit for 2017 is $500,000, and the phase-out is $2 million. This was enacted through the Protecting Americans from Tax Hikes Act of 2015 (PATH) and presents you with an opportunity to deduct a certain amount of your equipment, technology and software purchases when it comes time to do your business taxes. The PATH Act was signed on December 18, 2015. Here at Allied Capital Group, we consult with business accountants throughout the year to get the very latest information pertaining to Section 179, and we make regular updates to our website to keep our customers and equipment vendors fully informed.


Realize the Benefits of this “Expensing” Deduction

Allied Capital Group finds that most businesses we work with take advantage of tax write-offs in order to help lower the true cost of ownership on their business equipment. We can structure a custom-tailored equipment financing plan for your individual needs, just like we have done for thousands of small and medium-sized businesses throughout the country since 1988. In addition to helping you save money, an equipment lease preserves your business credit line and allows you to make periodic upgrades to your equipment, software, vehicles and more.


The PATH Act Extends Section 179 Permanently

The PATH Act’s permanent extension of the Section 179 tax deduction can help US businesses purchase more equipment, hire more workers and maintain a better bottom line. Allied Capital Group will stay on top of Section 179 and update our website should anything change.  Bookmark this Allied Capital Group web page so you can readily access the latest information about equipment expensing limits.

Non-Tax Capital Lease Deductions

The main benefit under a non-tax capital lease is that it can take full advantage of Section 179. Under this tax code provision the government allows small business tax payers the ability to write off up to $500,000 on qualified equipment that is purchased and placed into service this year. Through Section 179 a business can significantly lower the true cost of equipment ownership. Examples of non-tax capital leases include a $1.00 Buyout, 10% Purchase Upon Termination (PUT) and Equipment Finance Agreement (EFA). Allied Capital Group offers many types of equipment leasing structures that you can choose from.


Tax Lease/True Lease and Section 179

With a tax lease such as a fair market value (FMV) lease, the lessor retains ownership and as the lessee you can expense the monthly lease payments in the period they are paid as a general operating expense. In most cases the entire lease payment can be fully deductible. For example: Suppose the monthly investment is $2,000 and the term is 36 months (3 years). Assuming a 35% tax bracket, the monthly tax savings would be $2,000 x .35 = $700. Which means the total tax savings over the term of the lease contract would be $700 x 12 months x 3 years = $25,200.

Section 179 Tax Deduction: Qualifying Property

Business owners will often buy or lease equipment without knowing if their equipment costs can be deducted. If you want to take advantage of the Section 179 tax deduction, it is essential for you to know if your equipment qualifies. The best way to find out is by contacting your business accountant, as he or she is the best resource for everything related to business tax write-offs. Up to $500,000 worth of qualifying equipment can be deducted, so long as it is purchased and put into use on or before the end of the year. Here is a list of property that is generally accepted under the current tax deduction:


  • Office Equipment                                                                                               
  • Office Furniture and Fixtures
  • Computers and Software
  • Machinery                                                                                             
  • Large Business Equipment
  • Manufacturing Tools
  • Business Vehicles
  • Single-Purpose Structures

Put Section 179 to Work for Your Business

Small business expenses can add up quickly, particularly if your company needs new or updated equipment. Fortunately, this tax deduction can help reduce the financial burden that comes with buying or financing equipment. It allows qualifying property to be deducted in the year it is purchased and put into use, which is a fantastic benefit for any business. The Section 179 tax deduction can be used by sole proprietors, partnerships and corporations. Here at Allied Capital Group, we’ve provided equipment financing programs to thousands of businesses in the United States, and many of them have benefited from the Section 179 tax deduction. As mentioned above, contact your tax professional if you have any questions.