Congress clamped down on the SUV loophole in October 2004, but the rest of Section 179, designed to stimulate business spending with an up-front tax break, remains in force and has even improved with age. Most business property that is useful for a few years is accounted for as depreciating over time. For tax purposes, a portion of the cost can be deducted each year. What Section 179 does is allow a business to receive all those tax benefits in the first year. In 2003, the one-year write-off limit was quadrupled from $25,000 to $100,000. Indexed for inflation, that amount is now $125,000. One other important change came through in 2003. The IRS added off-the-shelf software to the list of eligible property under Section 179. Computer hardware was already on the list. That means that any computer software you purchase through the end of this year may qualify for a complete write-off on your taxes for the coming year. You could think of it as a giant rebate – spend money in this calendar year and get a big chunk of it back in the next year.
There may never be a better opportunity to purchase computer hardware and software for such a small net cost to you. If you’ve been thinking about an upgrade or replacement, call and talk to us. They’ll be happy to be sure you get the most bang for your buck!