For many people it’s that time of year again. When budgets are being spent and negotiated for the following year. This can be a confusing time for many lab managers, professors, researchers and business owners. However, this blog should help simplify the tax advantages to making capital equipment purchases in 2021.

Section 179 at a Glance for 2021

2021 Deduction Limit = $1,050,000

This deduction is good on new and used equipment, as well as off-the-shelf software. To take the deduction for tax year 2021, the equipment must be financed or purchased and put into service between January 1, 2021 and the end of the day on December 31, 2021

Equipment Purchases Spending Cap = $2,620,000

This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis. This spending cap makes Section 179 a true “small business tax incentive” (because larger businesses that spend more than $3.67 million on equipment won’t get the deduction.).

Bonus Depreciation: 100% for 2021

Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached. The Bonus Depreciation is available for both new and used equipment.

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Section 179 Frequently Asked Questions

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Can I take a deduction on re-certified instruments?

This deduction is good on new and used equipment, as well as software.

Can I take a deduction on instruments that I finance?

You can deduct equipment that is either financed or purchased in 2021.

Who Qualifies for Section 179?

All businesses that purchase, finance, and/or lease new or used business equipment during tax year 2021 qualify for the Section 179 Deduction.

Is Bonus Depreciation (100% First Year) Always Available?

Bonus depreciation is offered some years, and some years it isn’t. Right now in 2021, it’s being offered at 100%.

What is the Section 179 Deduction?

Section 179 allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means that if you buy (or lease) a piece of equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves

Financing instruments can be a budget friendly way to conserve cash flow and get your research/production completed!

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