Equipment Financing and Section 179 Calculator for 2023 (2023)

2023 Section 179 Deduction Limits

Section 179 got an $80k raise this year, making 2023’s Section 179 Limit $1,160,000.This means your company is allowed to deduct the full purchase price of ALL qualifying equipment purchased during 2023, up to the limit of $1,160,000. The “total cost of equipment purchased” has also risen to $2,890,000. After that number is reached, the deduction decreases on a dollar for dollar basis.

Section 179 is a true SME Tax Deduction

Section 179 was originally put into place to encourage small and mid-sized businessesto self-invest by buying equipment. The limits have risen annually, and can make a true difference to small and mid-sized companies by dramatically reducing their tax bill.

The total capital purchase limits are put into place to ensure that smaller businesses are the main ones that benefit. Most small and mid-sized companies will not reach the spending limits, ensuring they get a full benefit from the tax deduction.

Section 179 Has a Deadline

A Look Towards the Future

Section 179 has been made a permanent part of the IRS tax code. The deduction has also risen annually the past few years, with 2023’s increase being the largest in recent memory. It’s a GREAT time to take advantage of Section 179.

Section 179 Qualifying Property (disclaimer: check with your accountant for full details and eligibility.)

• Most tangible equipment that a business requires will qualify for Section 179.This includes machinery and production equipment, all manner of IT/computer equipment (workstations, servers, printers, laptops, routers, etc.), office furniture / cubicles, most common office machines like copiers, scanners, paper shredders and more, signage (both interior and exterior), shelving and fixtures, and much more.
• The equipment must be new or “new to the company” (meaning most used and pre-owned equipment is going to be eligible.)
• Almost all “Heavy equipment” (such as construction machines, farming equipment, tree-work and forestry equipment, paving equipment, drilling rigs, and more) will qualify.
• Hand tools used by workers will almost always qualify. This includes both powered and non-power tools.
• Most commercial and work-use vehicles will qualify. These can include (but are not limited to) vehicles that can seat 9 passengers or more, have a6’ cargo area, and similar (such as a typical cabover cargo/delivery vehicle.)
• Some common passenger vehiclesand SUV’s may qualify provided they exceed 6,000+ pounds Gross Vehicle Weight (GVW). They also need to be at least 50% business use. For 2023, they are limited to a maximum $28,900 deduction (check with your accountant for status).
• Software can qualify for Section 179 too. The conditions for this include it being “off the shelf” (or offered for common download / SaaS), carrya non-exclusive license, and not be “custom”. This means applications like operating systems, office suites/spreadsheets, common CRM software, graphic and video editing programs, and similar. At this time, websites and/or phone apps are not included, but check with your accountant as this could change as they grow in use.
• Storage structures will usually qualify. This can include storage tanks, grain storage, sheds, etc. However, your main buildings will not qualify as storage (even if you have a back room you use.)
• Certain general building improvements will qualify. These include HVAC, security systems, fire systems, roofing improvements, and similar.
• If you wish to lease or finance equipment, and are unsure about its eligibility, check with your accountant or see IRS Publication 946.
• As stated earlier, most equipment listed above can be used / pre-owned. As long as it’s “new to your company” it will qualify in most cases.

The equipment listed above need not be new – it can be used (but new to you). Almost any "portable" (non-permanently installed) piece of business equipment will likely qualify. If you have any questions on whether something you wish to lease or finance will qualify for Section 179, you can always ask us, or reference IRS Publication 946.

For 2023, Section 179 deduction has grown by $80k to $1,160,000. This is the largest deduction ever offered to businesses, making it a significant opportunity for businesses to reduce their tax liabilities.