What is Section 179?

• In short, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualified equipment and/or software purchased or financed during the tax year. 

This means that if you buy or lease a piece of qualified equipment you can deduct the full purchase price from your gross income in the same tax year which most business owners would prefer. This incentive was created by the U.S. Government to encourage businesses to purchase equipment and help stimulate the economy.

Tax year example at a glance*: 

• Deduction Limit: $500,000.

• Qualified items: new and used equipment, including new software such as EHR/EMR.

• Limit on equipment purchases: $2 million.

• “Bonus” Depreciation: only new equipment qualifies. 100% (taken after the $500k deduction limit is reached). This can also be taken by businesses that exceed $2 million in capital equipment purchases.

• Example: 

* please note that this is a simplified overview. For further details consult with your accounting professional or IRS tax codes.