As a business owner, navigating the world of taxes can be quite challenging. If you own a business in North Dakota, you should qualify for the Section 179 tax deduction. The deadline is December 31st, and as the end of the year is creeping up on us rather quickly, here are a few things you should know about how Section 179 might benefit your business.
Understanding Section 179:
Section 179 of the Internal Revenue Code is a tax provision that allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. Originally designed to encourage small businesses to invest in themselves, Section 179 has evolved to encompass a wide range of assets.
For most section 179 property you placed in service in tax years beginning in 2022, the maximum amount you can elect to deduct is $1,080,000, according to the IRS. This also means that the maximum equipment purchased must total $2,700,000 to qualify.
In order for equipment, vehicles, and/or software to qualify for the Section 179 tax deduction, it must be used for business purposes more than 50% of the time. It also must meet one of these requirements:
Section 179 for Business Vehicles:
When it comes to buying a car for your business, Section 179 can be a game changer. Traditionally, the cost of a vehicle would be depreciated over several years, spreading your tax benefits thin. However, Section 179 lets you deduct the full cost of qualifying business vehicles in the year they are placed in service, up to a specified limit.
“Section 179 is a great incentive for businesses to take advantage of, at any point of the year,” says Lee Zander, Sales Manager. “Many of our customers visit us every year, and we make it a point to make the car buying process as quick and easy as possible. If you own a business and need a new vehicle, and you want to save time on taxes, this is the time for you to stop by!”
Remember, while Section 179 is generous, there are limits to how much you can deduct. In recent years, the maximum deduction for qualifying vehicles has been set at a significant amount. However, it’s essential to be aware that there is a phase-out threshold. If your total purchases of qualifying property exceed this threshold, there will be deductions.
Section 179 can be something extremely beneficial for you and your company. If this is something you want to take advantage of before the year ends, make sure to stop in so we can help you out.