Frequently Asked Questions

Why was Section 179 created? Section 179 was created as part of a government stimulus act to encourage small businesses to invest in their growth by providing accelerated depreciation and tax deductions on qualifying business purchases.

What is the 2023 Annual Deduction Limit? For 2023, the maximum amount you may elect to deduct is $1,160,000 on qualifying property purchased and placed into service during the 2023 tax year. If your purchases exceed $2.89 million, the deduction amount will be reduced dollar for dollar equal to the amount over $2.89 million.

What is Bonus Depreciation? Bonus depreciation allows qualifying businesses that spend more than the Section 179 limit to depreciate up to 100% on the remaining purchase amount. Bonus depreciation is very useful to companies that spend more than the allowed $2.89 million in a tax year. After Section 179 deductions are taken by a small business, bonus depreciation may be applied to further accelerate depreciation.

What types of purchases qualify for Section 179? Purchases of business equipment, office furniture, computers, software and technology as well as many other business assets qualify for Section 179.

Can you apply the Section 179 deduction and/or bonus depreciation to financed equipment? Yes, for eligible companies, choosing to finance equipment purchases can help organizations save when the finance agreement enables you to take advantage of Section 179! Talk to your tax advisor to determine the type of financing that best suits your company's unique tax needs.

How do I take advantage of the Section 179 Deduction? If your company and the assets qualify, fill out applicable parts of IRS Form 4562 and include it with your tax filing.

To elect the Section 179 tax deduction, qualifying assets must be purchased and put into service during the tax year for which you are electing the deduction.