We’re nearing the end of 2024, which means that many companies are reviewing their yearly budgets to ensure they are making the most of their spending to support their business operations.

The Section 179 tax benefit may offer your business an opportunity to save money on IT equipment expenses. In this article, we’ll explain how the tax break lowers your current-year tax liability for refurbished Dell servers, storage arrays, and other IT equipment.

What is Section 179?

The Section 179 tax deduction allows businesses to deduct the full amount of qualifying equipment from their income the year it is purchased, rather than capitalizing it and depreciating it incrementally in future tax years. This benefit is primarily targeted toward small and medium-sized companies, allowing them to reduce their tax obligations by investing in their company.

Why use Section 179?

Making a Section 179 deduction can help your business:

  • Increase cash flow: The deduction artificially lowers taxable income for the year, allowing your company to pay less in taxes and have more available cash.
  • Take advantage of the time value of money: A dollar today is worth more than a dollar 5 years from now, which is when you might finally finish depreciating your IT hardware if you don’t use your Section 179 deduction. The earnings potential of that extra cash today could contribute to long-term business success.

What purchases qualify for Section 179?

Section 179 covers several categories of business expenses, including new and used machinery and equipment, as well as off-the-shelf software. The product must be used to actively conduct business more than 50% of the time.

The product must be both purchased and used during the current tax year–meaning your Dell server or storage array must be installed and operational before 12/31/24 to qualify for this year’s tax deduction.

Since all the software we sell is ready-to-use, any purchase from STI could qualify for Section 179.

What companies can take advantage of Section 179?

The company must have a taxable profit. Section 179 is primarily designed to help small and medium sized businesses with an equipment spending threshold lower than the annual deduction limit.

What is the deduction limit for 2024?

The maximum deduction changes year to year. In 2024, the limit is $1,220,000. 

How do I claim a Section 179 tax deduction?

If your equipment is in operational use by 12/31/24, fill out Form 4562 and include it with your business’s tax return.

Can someone at STI help me with financing?

If you want to set up a financing or payment plan for your IT expenditure, we can connect you with a trusted third party financier.

We’re here to help.

To learn more about Section 179 or our refurbished Dell hardware solutions, contact our Dell-certified experts.