New investments in equipment and technology are often the key to growing your business, but budget restrictions can make large purchases out of reach. Fortunately, the Section 179 tax deduction provides a powerful solution, enabling businesses to immediately write off the full purchase price of qualifying assets.
For businesses looking to upgrade their design software, acquire new workstations, or implement new technologies, understanding and utilizing this deduction can set your business up for success and growth in the new year.
In this blog, we’ll dive into what the Section 179 tax deduction is, the benefits, what qualifies, and how ATG can help you turn tax savings into strategic investment.
What is the Section 179 Tax Deduction?
Section 179 is a provision in the IRS tax code designed to encourage businesses to make investments for growth.
Instead of requiring you to slowly deduct the cost of equipment over several years through standard depreciation, Section 179 allows your business to take an immediate expense deduction for the full purchase price of qualifying property in the year it was both acquired and placed into service.
Think of this as an instant cost recovery. If you buy a piece of qualifying equipment and place it into service by December 31, you can deduct the full purchase price from your taxable gross income for that tax year.
Benefits of Section 179
Section 179 addresses key challenges that many businesses face: restricted budget and stagnant growth. By utilizing this deduction, you can build a strong foundation for the new year and position your business for success.
Immediate Savings
By deducting the full purchase price immediately, you reduce your overall tax liability for the current year. This immediate tax savings acts as a financial boost, lowering the net cost of your purchased assets and freeing up budget for other operational needs.
Position Your Business for Growth Now, Not Later
Section 179 eliminates the financial penalty of waiting, so you can acquire the technology, equipment, or software needed to increase efficiency today, rather than delaying necessary upgrades until the next budget cycle.
Generous Limits
You can deduct the full purchase price of qualifying equipment (new or used) bought or financed in the current tax year, up to $2,500,000. This means you can write off the entire cost in the year you buy and start using the equipment.
- Maximum Deduction – $2,500,000
- Phase-Out Threshold – $4,000,000 (The deduction starts to phase out dollar-for-dollar once total equipment purchases exceed this amount.)
- Bonus Depreciation – 100% (Available after Section 179 is applied to further accelerate deductions.)
What Qualifies for Section 179?
To qualify, property must be tangible, purchased and used for your business (at least 50% of the time), and placed in service before the year-end deadline on December 31.
Common Qualifying Assets Include:
- Computers and technology systems
- Off-the-shelf software
- Manufacturing equipment and machinery
- Office furniture and equipment
- Business vehicles
- Certain business-use property improvements (such as HVAC, alarm systems, etc.)
Eligible Solutions at ATG
As a technology partner, many of the solutions we provide at ATG could be eligible for qualifying categories such as off-the-shelf software and computers and technology systems.
Off-the-Shelf Software
Software that is available for purchase by the general public and subject to an annual fee or purchased upfront is typically eligible.
- Design & Modeling Software: Licensing or purchasing industry-leading applications (e.g., Autodesk products like Revit, AutoCAD, or Civil 3D) used for design and construction documentation.
- Project Management Software: Programs used for scheduling, bidding, and collaboration (e.g., Bluebeam Revu, or other construction management platforms).
Hardware and Technology Systems
Any physical computing or networking equipment necessary for your business operations can qualify.
- High-Performance Workstations: Powerful hardware such as BIMBOX computers needed to run complex AEC software and rendering applications efficiently.
- Advanced Technology: Specialized hardware, such as Leica scanning equipment, or technology systems, like data backup programs used to manage large project files.
How to Take Advantage of Section 179
While Section 179 is a powerful incentive, tax laws can be complex. Be sure to consult with a qualified tax advisor to confirm the eligibility of your purchases and ensure you properly file for the deduction.
- Act Now: Ensure all qualifying solutions are purchased, installed, and placed in service by December 31.
- Plan with ATG: Contact ATG today to discuss your upgrade strategy and secure the latest software and hardware solutions.
- Document and File: Elect the deduction by filing IRS Form 4562 with your business tax return.
- Consult Your Tax Advisor: Always confirm the eligibility of your purchases and finalize your deduction strategy with a qualified tax professional to ensure compliance with all limits and regulations.
