As discussed in our Auxo Medical blog earlier this month, the Section 179 Tax Deduction is intended to motivate businesses to stay competitive by purchasing needed equipment, and writing off the full amount on their taxes for the existing year. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.
Determine Your Tax Savings
Not only can Section 179’s Deduction make a significant difference on equipment costs, but there’s even a Deduction Calculator for 2018 that can help estimate your tax savings. So how much money can your business save this year? Try using this simple calculator.
How the Calculator Works
In order to use the Section 179 calculator, you’ll first need to input the cost of the equipment, the estimated life of the equipment, and your marginal tax rate. These are the three components that determine how much you’ll save by electing the 179 Deduction versus standard depreciation methods.
If you’re unsure of your tax rate, reference the previous year’s tax bill as a guide, or ask your accountant for help. You can also click here to discover your marginal tax rate.
So what’s eligible for a Section 179 tax break? To give you a general idea, here are some examples:
- Manufacturing equipment and tools
- Business appliances
- Office equipment
- Office furniture
- Business vehicles
- Software that is not custom designed
Parameters on 2018 Deduction Limits
Good news! The deduction limit for 2018 was raised to $1,000,000. This is a hefty deduction, and means that businesses can deduct the full cost of equipment from their 2018 taxes, up to $1,000,000, with a “total equipment purchased for the year” limit of $2,500,000.
Section 179 is designed to benefit small to medium businesses that purchase between $5,000 to $2,500,000 worth of equipment. The full deduction can be claimed until that $2,500,000 number is reached. Then, the deduction is lowered on a dollar for dollar basis (then it disappears entirely once $3,500,000 worth of equipment is purchased). This deduction can make an impact to your bottom line at the end of the calendar year.
To take advantage of Section 179’s benefits for 2018, the equipment must be purchased and put into service before midnight on 12/31/2018. To clarify, it’s not enough to just purchase the equipment — you must also put it to use in your business during this time. Also, please note that Section 179 savings are not automatic; you have to elect to use Section 179 by submitting Tax Form 4562 to claim your deduction.
Be sure to keep records of the business equipment you bought or leased during the year, including where you acquired the equipment from and the date the equipment was acquired and put into service.
If you’re considering procuring equipment for your medical facility before the end of the year to take advantage of these deductions, Auxo Medical offers competitive rates on refurbished and reconditioned medical equipment. We provide reliable medical equipment and services to ambulatory surgery centers, hospitals, laboratories, private physician practices, and more. Give us a call at (888) 728-8448 or contact us here.