government financial services

Tax Deduction Programs 2011

WHAT IS THE SECTION 179 DEDUCTION?

The U.S. Government wants to encourage our nation’s businesses to buy and lease new equipment.  The IRS tax code provides a Section 179 deduction that allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year.  That means if you buy or lease something in the qualifying category, you can deduct the full purchase price from your gross income.  If you think about it, it’s a great way for your business to invest in itself!

As a simple example, suppose your were to lease equipment valued at $60,000.  That full deduction would result in a $21,000 tax savings in the 35% tax bracket.  That means after tax savings, your $60,000 equipment cost you just $39,000.

    (NOTE:  In 2011 there is a $500,000 maximum deduction level.)
This example is provided for informational purposes only and is not meant to provide financial or tax advice.  Please consult a tax advisor for eligibility and actual tax benefits for any IRS program.