Take Advantage of 2022 Tax Incentives for New & Used Capital Equipment

It’s not too late to take advantage of 2022 tax incentives for new and used capital equipment! 100% of equipment purchased and put into service in 2022 is tax-deductible.

Section 179 of the IRS tax code allows businesses to deduct up to $1.08 million of qualifying equipment purchased and placed into service during 2022. Expensing the full amount of the purchase, as opposed to deducting depreciation over multiple years, can greatly reduce taxed owed. In addition, Bonus Depreciation allows taxpayers additional benefits if the Section 179 purchase allowance of $1.08 million is exceeded.

These incentives can help your bottom line and are easy to take advantage of, as long as equipment is purchased and placed into service by the end of the year. With 150+ machines in stock and ready for immediate delivery, Absolute Machine Tools can help you take full advantage of this offer!

So, how do these tax incentives affect different types of businesses?

By allowing businesses to deduct the full amount of the purchase price (the deduction is a robust $1.08 million for 2022), Section 179 is a fantastic incentive for businesses to purchase, finance or lease equipment this year.

By deducting the full cost, you lower the amount you pay for equipment or software substantially.

To qualify the deduction, the equipment must have been purchased (or financed) and placed into service by midnight, December 31st of the year you are taking the deduction for.

Our range of equipment qualifies for the deduction incentive, but it must be placed into service by December 31, 2022.

All you need to do is buy (or finance/lease) the equipment, and use a special IRS form. That’s it. Details here.

For the past several years, Congress has raised the deduction limit, let higher limits expire, then raised them again. The various tax and stimulus acts have also affected Section 179 over the years. The best way to stay on top of Section 179 is to visit Section179.Org often.

32% Flow-through Type Companies

For Sole Proprietorships, Partnerships or S-Corporations, the tax benefits break down as follows:

• Section 179 Deduction: This allows companies to deduct the amount spent on purchasing new or used equipment from their taxable income. The annual deduction limit is $1,080,000 for companies that purchase or lease up to $2,700,000 of equipment. The deduction is phased out dollar for dollar from $2,700,000 to $3,780,000 and does not apply to anything above that $3,780,000 limit.
• Bonus Depreciation: After the Section 179 deduction limit has been reached, companies can take advantage of Bonus Depreciation. Schedule: 80%: 2023; 60%: 2024; 40%: 2025; 20%: 2026.

21% C-Corporations

For C-Corporations, the benefits break down a little bit differently:

• Section 179 Deduction: This works mostly the same as for a 32% flow-through company, allowing C-Corporations to deduct the amount spent on purchasing new or used equipment from their taxable income. For 2022, the annual deduction limit increased to $1,080,000 for companies that purchase or lease up to $2,700,000 of equipment each year.
• Bonus Depreciation: The Bonus Depreciation incentive allows businesses to immediately deduct 100% of the cost of eligible equipment the year it is placed into service. This was increased from 50% to 100% through 2022. This bonus depreciation is now also available for new and used equipment purchases.

There’s never been a better time to purchase a new CNC machine tool for your company! Take advantage of the tax incentives and talk to Absolute Machine Tools today about your CNC machine needs.