Take advantage of Section 179.

The 2022 Section 179 deduction is $1,080,000 (that’s one million, eighty thousand dollars). That’s a full 30k increase from last year. This means your company can buy/lease/finance new or used equipment and write off the full cumulative purchase price on your 2022 taxes. This can result in big tax savings, (check out the tax savings calculator attached) and increased profits.

Indeed, the fourth quarter is an opportune time to finalize equipment purchases. Based upon YTD financial results, management should analyze if an investment in equipment or software is warranted. It all boils down to YTD production efficiency results. Is additional equipment or software going to move these statistics in the right direction? As production winds down in late December, it becomes an excellent time to install new equipment or software with minimal disruption on the production floor. So taking advantage of Section 179 tax benefits makes it a very smart reason to wrap up those equipment or software purchasing decisions before we ring in the New Year.

Your financial partner can help you analyze the amount of tax savings you can realize by closing an equipment deal and putting it on the floor by December 31. For example, Apex Capital offers this Tax Savings Calculator to help you see the net cost (after tax savings) of buying and installing equipment or software by the end of the year. For example, type in a $100K equipment expenditure and you will see that the net cost of the equipment or software after tax savings is $79K.

Now at this time of the year, if we are talking about equipment then it is surely pre-owned equipment being considered unless you placed your order for something new very early in the year. Lead times for new equipment are running 8-12 months. But, if you need something in the first half of 2023 in order to meet production goals, pre-owned equipment may be worth your immediate consideration to serve as a stop gap. Once the new equipment arrives in 2023, you can always sell the used equipment to the next company needing a temporary solution or keep it as a backup. The point here is that with these tax savings combined with the possibility of picking up used equipment at a fraction of the cost of new (and available immediately), Section 179 can reduce taxes while taking the pressure off waiting for new equipment to arrive in time to meet production goals.

So as the year winds down, if you are looking at any potential off the shelf new or used equipment or software purchases, making a decision and pulling the trigger before year end can effectively reduce the cost of such equipment or software with Section 179 Tax savings in play.

So, if you’re on the fence, Section 179 could be the deciding factor!