Every year we promote the tax savings benefits of Section 179 to our clients, new clients are often not aware that the computer hardware (and even some software) they use in their business is a tax deductible expense. Making these purchases before year end saves them a boat load of money on the next years tax bill and effectively works as a discount on the equipment they need.
What is Section 179? Section 179 is an immediate tax saving deduction on any depreciable asset – such as vehicles, hardware and software. Rather than depreciating these items in future tax years and having to track that, you can benefit from lowering your liability right now.
This especially helps our clients when making larger technology purchases such as replacing aging servers. A new server can easily run $10,000 or more, but when you factor in the benefit of Section 179 it makes for a sizeable discount on a purchase of that size.
The maximum discount for 2022 is $1,080,000, so the sky is the limit no matter what size purchase you’re planning to make. To maximize the benefits however, we do find that making these purchases at the end of the year is the most beneficial as you see the deduction much sooner when rolled into the next years taxes.
Here’s a chart on what a $10,000 purchase would look like after utilizing Section 179:
Of course, every business set up is different and just looking at the numbers may not give you enough of an idea of how you can use Section 179 in your business, so we also made this chart of things our clients often look to do before the year ends that may be an inspiration to you as well.
Software is a great way to use Section 179 this year in particular, with Windows 7 and 8 for desktops and Windows Server 2012 all losing mainstream support access in 2023.
While you’re looking to upgrade your Windows software you will probably also want to consider new hardware, the useful life expectancy for computer hardware and servers is around 5 years with typical use and any machines that came from the factory with Windows 7 or Windows Server 2012 installed will be well past that window.
You may also not know that Microsoft has announced it will no longer allow updates for their Office suite of software on outdated machines, so the time is ticking to get those upgrades done before your office staff loses the ability to use Office software on their devices. You can learn more about the updates coming from Microsoft in 2023 with our free guide here.
If you’re looking for assistance in procuring technology solutions for your business, Valley Techlogic can help. We have partnerships with Microsoft, Dell, and Lenovo as well as other technology vendors and can help you replace aging equipment easily before time runs out on the benefits of Section 179 this year. Reach out today to learn more.
Looking for more to read? We suggest these other articles from our site.
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This article was powered by Valley Techlogic, an IT service provider in Atwater, CA. You can find more information at https://www.valleytechlogic.com/ or on Facebook at https://www.facebook.com/valleytechlogic/ . Follow us on Twitter at https://twitter.com/valleytechlogic.
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