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Section 179 Tax Deduction For 2022

Section 179

The 2022 Section 179 deduction limit for businesses is $1,080,000 (a $30,000 increase from 2021). Your business can deduct the full price of qualified equipment with a “total equipment purchase” limit of $2.7 million.

If you purchase equipment over $1,080,000 (and put it into service by December 31st this year), you may qualify for Bonus Depreciation. Bonus depreciation details are complex, so be sure to consult your tax adviser!

Start The Process Sooner Than Later

It’s best to start the process sooner than later, especially before the year-end rush. The sooner you start, the more likely you can use the opportunity to keep cash in your business and avoid equipment not being available when you need it.

Remember: Equipment must be in use before the end of 2022 to qualify. If the equipment you are looking at takes a few months to deliver, plan ahead – that way, you can make sure it is available before the deadline.

Benefits of Equipment Financing

Let’s recap. When you combine fast and easy equipment financing with Section 179 tax savings, your business has an easier way to fit equipment into your budget. These two tools allow you to…

  • Maximize your cash flow.
  • Keep more cash & lines of credit open for future growth.
  • Know exactly what your monthly equipment expenses are.
  • Accelerate your income tax benefits.

If your business finances equipment between January 1st to December 31st and uses it before the end of 2022, you can legally avoid paying federal income taxes on your 2022 profits.

How do I get the deduction?

Section 179 is a tax deduction for businesses that have placed new or used equipment into service within the year that they purchased or financed. This deduction is not automatic and must be elected. In order to elect to take the deduction, you’ll need to fill out Part 1 of IRS form 4562. 

Make sure this completed form is attached to your tax return. Not all types of equipment qualify, therefore you should consult with your accountant or tax professional prior to making any purchases.

An Example: