In late 2015, Congress passed and signed the PATH Act (Protecting Americans from Tax Hikes Act), which had the added benefit of increasing the Section 179 deduction cap to $500,000. This is great news for businesses, as Section 179 allows you to write off the full cost of technology purchases made during 2016.
Section 179 covers a surprisingly long list of qualifying items, including both new and used hardware, off-the-shelf software, office furniture and equipment, and business vehicles. Even items like personal computers can be included under the “partial business use” category, with some stipulations attached. And as this deduction is only available to businesses whose total technology purchases for the year are less than $2 million, Section 179 is geared perfectly towards small and mid-sized businesses.
There is one small catch; the December 31st, 2016 deadline. Any business looking to take advantage of Section 179 is working with an increasingly tiny window. Only items purchased, shipped, and installed at your physical location by midnight on December 31st are eligible for this deduction. This means that not only do you have to place orders and have invoices prepared for your records, but the items in question need to be in use at your office.
If you’ve been considering upgrading your workstation computers, or treating your staff to some comfy new office chairs, now is the time. Emphasis on now.
But don’t let the time constrains push you into making hasty choices. Reach out to your IT provider to discuss your options. They can make recommendations that will fit your needs, and help make sure that your purchases will qualify for Section 179. In addition to offering you guidance and advice, they can coordinate with your staff to get your new hardware, software, or equipment up and running before the deadline passes.
You can find more details on Section 179 at the official website. And while your IT provider can help you with this process and offer valuable input, it’s always a good idea to speak with your CPA or tax attorney before making any final decisions. Especially when making big purchases.