Section 179

1. Max Deduction

The Section 179 deduction limit for 2023 is $1,160,000. This means your company can deduct the full cost of qualifying equipment (new or used), up to $1,160,000, from your 2023 taxable income. This deduction is good until you reach 2.62 million in purchases for the year.

2. Example

If your company purchases $1,160,000 in new/used equipment, and for our sake let us assume these are all forklifts. Again, assuming a tax bracket of 35% this scenario will net your company a cash savings of $402,169.

3. Timing

Equipment must be purchased (or financed/leased) and put into service by 12/31/2022. 2020 Form 4562 (irs.gov)

4. Limits

Section 179 is intended for Small/Mid-sized businesses. There is a capital limit on purchases of $2,890,000. Once that limit is reached the deduction is decreased dollar for dollar. The deduction amount reaches $0 at $3,670,000 in Equipment Purchases.