Congress has extended IRS Section 179 to cover the 2011 tax year. That means that qualifying business equipment purchases (including most computer hardware and software) can be deducted at full cost on your 2011 business taxes, instead of being amortized over several years. From section179.org:
“The Section 179 Deduction limit increased to $500,000. The total amount of equipment that can be purchased increased to $2 million. This includes most new and used capital equipment, and also includes certain software.”
Translation: Now is a great time to purchase hardware and software! You effectively receive a discount equivalent to your tax bracket on the purchase.
For example, if you were to purchase $100,000 of IT equipment by December 31st and were in the 35% tax bracket, you could write off $35,000. That’s the price of a new car! The equipment’s net cost to you is $65,000.
If your plans for 2012 include any hardware or software purchases or upgrades, do it now! The Section 179 provision is scheduled to expire at the end of 2011.
Disclaimer: We are neither accountants nor tax lawyers. This should in no way be construed as tax advice. Talk to your CPA or visit www.irs.gov for details.