With the 2017 tax year quickly coming to a close, it's time for small business to asses their situation, prepare their taxes, and begin to plan for the future. At Skid Steer Solutions, we're a small business ourselves. We feel as though many of our customers would be in a great position to take advantage of the Section 179 Tax Deduction. Not only do we conduct business in the skid steer attachment, excavator attachment and mini skid steer attachment markets, we also deal with a whole host equipment and business related expenses. Given our industry, history and experience, we feel as though we have a pretty strong grasp on how this deduction works, and how it can provide value to your business.
What is Section 179?
The great thing about Section 179 is that it is a true "small business" deduction. Small business with equipment purchases of $2 Million or less most likely qualify. Section 179 has been designed to help America's small businesses save money by deducting the full purchase price of equipment and attachments from their gross income, lessening their tax burden. The idea is that these increased savings will incentive businesses to continue investing in themselves and their employees, strengthening the overall economy.
What types of products are eligible for the deduction?
Here's the key for customers of Skid Steer Solutions: Machinery and Equipment for business use, including attachments and vehicles are all eligible. Eligible equipment may have been purchased, financed or even leased. Used equipment is also eligible, providing that it is new to you and your business. With that in mind, here is a full list.
- Machinery and Equipment for business use
- Tangible property used in business
- Business vehicles (gross weight of 6,000 lbs. or greater)
- Office equipment
- Office furniture
- Computers and "off-the-shelf" computer software
- Large manufacturing tools and equipment
- Machinery and Equipment for partial business use (deduction based of percentage of personal use vs. business use)
Example of Section 179 Tax Deduction
Cost of Equipment: $150,000.00
Section 179 Deduction: $150,000.00
Total First Year Deduction: $150,000.00
Savings on your Purchase (assumes a 35% tax bracket): $52,500.00
Lowered Cost of Equipment After Tax Savings: $95,000.00
Additional Details and Considerations
Equipment, machinery, attachments, and any other qualifying deductions must be purchased/financed and put into use by December 31 of the tax year you are claiming.
There are also further details to consider such as "Bonus Depreciation," as well as year-specific deduction limits and spending caps.
We of course recommend that you have an accountant or tax professional consult with your small business before making any purchases or claiming any deductions on your official tax return.