Maximize Your Tax Savings with Section 179 for 2023

By taking advantage of the changes for Section 179 in 2023, businesses can maximize their tax savings. With the increased deduction limit and phase-out threshold, businesses can deduct more of their equipment and software purchases, resulting in a lower tax bill. By understanding the changes for Section 179 in 2023, businesses can potentially get the most out of their tax savings.

What is Section 179?

Section 179 of the IRS tax code was created by the U.S. government as an incentive to encourage businesses to buy equipment and invest in themselves. It allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. If you buy (or lease) a piece of qualifying equipment, you can deduct the full purchase price from your gross income.

Changes for Section 179 in 2023*

Increased section 179 expense deduction. The maximum amount you can elect to deduct for most for most section 179 property you place in service in 2023 is $1,160,000. This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2,890,000.

The maximum section 179 expense deduction for sport utility vehicles placed in service in tax years beginning in 2023 is $28,900.

What qualifies for section 179 deduction?

The IRS defines qualifying equipment as tangible property that is used in a trade or business and includes items such as machinery, vehicles, computers, furniture, and other tangible property. However, not all tangible property falls under the section 179 deduction, so it’s important to consult your accountant or tax advisor.

Benefits of Madison Capital and Section 179

The advantage of using Madison Capital for leasing or financing equipment and then taking the Section 179 Deduction is that you can deduct the full amount of the equipment, without paying the full amount this year. The amount you save in taxes can actually exceed the payments, making this a very bottom-line friendly deduction.

Bonus Depreciation

Bonus depreciation allows you to deduct a portion of an asset’s cost right away, while section 179 allows for a fixed dollar amount deduction.

By utilizing bonus depreciation under section 168(k), you can take advantage of 100% expensing on qualifying equipment and property, leading to accelerated depreciation and a reduced tax burden.

The best part? You can combine both section 179 and bonus depreciation deductions. Start with section 179 and then use bonus depreciation for any amount exceeding the $1,160,000 limit.

Contact Madison Capital

Contact us today 800.733.5529, Get a Quote, or, to see how we can help you maximize your Section 179 tax savings with Madison’s equipment and vehicle lease financing solutions.

*Per IRS 2023 Publication 225. Please consult your accountant or tax advisor for information about your limits, qualifying equipment, and Section 179 qualified financing for your business.