As a follow-up to our recent Section 179 blog post, explaining the ins and outs of the tax code, it’s also important to understand updates for this calendar year.
2019 Limits for Section 179 Tax Code
For 2019, the deduction maximum cap was increased to $1 million, a significant incentive. This allows businesses to deduct the full expense of their medical equipment off of their taxes this year, which can be quite impactful for the end of year financials.
This deduction is valid toward acquiring new and used equipment, as well as software that is “off the shelf.” It also must be financed or purchased, and put to use between January 1, 2019 and December 31, 2019 by midnight.
Here is a Section 179 free download of the Form 4562 needed to utilize this deduction.
Tax Breaks for Small and Medium Sized Business
The 179 tax code originated to help support small to medium-sized businesses. While the cap for total deductions is $1 million in 2019, the limits for the total amount of equipment purchased this year is $2.5 million. Deductions ultimately go away completely once reaching $3.5 million in purchases.
The Future Looks Bright
Historically, Section 179 has had a lot of twists and turns. However, in the past few years, the U.S. Congress put an end to the ongoing changes and mandated that the Tax Deduction limit is now permanent. The limit was increased to $1 million indefinitely beginning in 2019. This is comforting for small and medium sized businesses, so they can plan accordingly and take advantage of the deductions earlier in the year.
Section 179 Qualified Materials
Nearly all types of business equipment that a business buys or finances should qualify for the Section 179 deduction. The equipment itself does not need to be new, but it must be new to the business for the calendar year when it is being used as a deduction.
Here is the list of material goods that generally qualify, according to the official Section 179 website:
- Equipment (machines, etc.) purchased for business use
- Tangible personal property used in business
- Business Vehicles with a gross vehicle weight in excess of 6,000 lbs (see Section 179 Vehicle Deductions)
- Computer “Off-the-Shelf” Software
- Office Furniture
- Office Equipment
- Property attached to your building that is not a structural component of the building (i.e.: a printing press, large manufacturing tools and equipment)
- Partial Business Use (equipment that is purchased for business use and personal use: generally, your deduction will be based on the percentage of time you use the equipment for business purposes).
- Certain improvements to existing non-residential buildings: fire suppression, alarms and security systems, HVAC, and roofing.
Section 179 Financing
Many businesses are finding the Section 179 Qualified Financing to be an appealing possibility, particularly with a variety of anticipated Federal Discount Rate increases on the horizon.
With reasonably priced monthly payments, and minimal or no money down needed beforehand, financing equipment and leveraging Section 179 can add value to your business’ bottom line now and into the future.
If you would like to talk about utilizing the tax code deductions on refurbished medical equipment, contact our team at Auxo Medical — we would be happy to help assist you.