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Categories: General Tax Terms

Section 179 Expensing refers to a provision in the U.S. tax code that allows businesses to deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year from their gross income, rather than capitalizing and depreciating the cost over several years.

This tax incentive is designed to encourage businesses to invest in their operations by enabling them to recover the costs of these investments more quickly. For the 2023 tax year, the maximum deduction limit is $1,160,000, and this deduction begins to phase out dollar-for-dollar once the total amount of equipment purchased exceeds $2,890,000.

For example, if a business buys $100,000 worth of qualifying equipment, it can deduct the entire amount in the year of purchase, significantly reducing its taxable income for that year.

Related Articles:
  • Glossary: Section 179 Expensing
    Section 179 Expensing is like a treasure chest for businesses! It lets you deduct the full cost of qualifying equipment in the year you buy it, boosting your tax savings and cash flow!
Alternative Meanings:
  • Section 179 Expensing

    Section 179 Expensing refers to a provision in the U.S. tax code that allows businesses to deduct the full cost of qualifying equipment and software purchased or financed during the tax year, rather than capitalizing and depreciating the cost over several years.

    This deduction is subject to certain limits and thresholds, including a maximum deduction limit and a phase-out threshold for larger investments. For example, in 2023, the maximum deduction limit is $1,160,000, and the phase-out begins when total equipment purchases exceed $2,890,000.

    By utilizing Section 179 Expensing, businesses can significantly reduce their taxable income for the year, thereby improving cash flow and incentivizing investment in new assets.

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