Leasing & Section 179

Section 179 Deduction Calculator updated for 2023

Are you considering whether to purchase or lease equipment in the current tax year? This Section 179 Deduction Calculator for 2023 may help in your decision. The changes in the Section 179 Deduction limits for 2023 are drastic, and will save your business a lot of money.

Cost of Equipment, Vehicles, and/or Software:

Section 179 Deduction:
80% Bonus Depreciation Deduction:
(on any remaining amount above $1,160,000)
Normal 1st Year Depreciation:
Total First Year Deduction:
Cash Savings on your Equipment Purchase:
(Assuming a 35% Tax Bracket)
Lowered Cost of Equipment, Vehicles, and/or Software after Tax Savings:
$ 0.00

This calculator presents a potential tax scenario based on typical assumptions that may not apply to your business. This page and calculator are not tax advice. The indicated tax treatment applies only to transactions deemed to reflect a purchase of the equipment or a capitalized lease purchase transaction. Please consult your tax advisor to determine the tax ramifications of acquiring equipment or software for your business.

Important Update for Tax Year 2023

Jan 1, 2023 - Using Section 179 and/or Bonus Depreciation with an Equipment Lease or Equipment Finance Agreement might be the most profitable decision you make in 2023.

Why? Because the amount you deduct will exceed your cash outlay for 2023 when you combine (i) a properly structured Equipment Lease or Equipment Finance Agreement with (ii) a full Section 179 deduction. It is a bottom-line enhancing tool (plus, you get the new equipment and software you're adding to your business).

Leasing & Section 179

Did you know that your business can lease equipment and still take full advantage of the Section 179 deduction? In fact, leasing equipment and/or software with the Section 179 deduction in mind is a preferred financial strategy for many businesses, as it can significantly help with not only cash flow, but with profits as well.

Equipment & Software Leasing - Non Tax / Capital Leases

The main benefit of non-tax capital leases is that you can still take full advantage of the Section 179 Deduction, yet make smaller payments. With a non-tax capital lease you can acquire and write-off up to $1,160,000 worth of equipment this year, without actually spending $1,160,000 this year. Small businesses managing cash flow can leverage a non-tax capital lease to minimize out-of-pocket cash and still take the full Section 179 Deduction.

One example of non-tax capital leases includes a "$1 Buyout Lease" and a "10% PUT (Purchase Upon Termination Lease)". In many cases, the amount you save in taxes will be MORE than the total of your first year's payments.

Equipment & Software Financing - EFAs

You may also obtain an equipment loan using an Equipment Finance Agreement (EFA) and still take the full Section 179 tax deduction.

Advantages of Leasing and Financing

You can deduct the full amount of the equipment and/or software, without paying the full amount this year. The amount you save in taxes can actually exceed the payments, making this a very bottom-line friendly deduction. In many cases, the deduction will actually be profit. Leasing equipment with the Section 179 in mind is a strategic preferred financial tool for many businesses, as it can significantly help with not only cash flow, but with profits as well.

How much money can Section 179 save you?

The new Section 179 Deduction limits will have a real impact on your equipment costs. Here's an easy to use calculator that will help you estimate your tax savings. Simply enter in the purchase price of your equipment and/or software, and let the calculator take care of the rest.

Please note that this Section 179 Calculator fully reflects the new Section 179 limits and Bonus Depreciation calculation brought about by the various economic stimulus acts of the past several years.

i.e. Calculation Using the Section 179 Calculator

Using a $35,000 equipment cost for a sample calculation shows how taking advantage of the Section 179 Deduction can significantly lower the true cost of the equipment purchased, financed or leased. In the example, $35,000 in equipment purchased has a true cost of $22,750. That's $12,250 added to your bottom line, which is substantial.

In order to qualify for the Section 179 Deduction, the equipment must be purchased, financed or leased and put into service by December 31, 2023.

Innovative Capital specializes in equipment financing and leasing for small and medium-sized businesses. With one simple application, great rates, and a fast "within hours" approval time, Innovative Capital will provide the equipment and software financing you need, while also being very friendly to your bottom line. Call us at 888-869-0070 x208