Do you know what a Section 179 deduction is? If not, you might want to find out, because as of 2007, businesses can expense up to $112,000 worth of equipment as a tax deduction!

In an effort to stimulate the economy, lawmakers have significantly increased the Section 179 deduction in hopes to encourage businesses to invest in equipment.

What qualifies for Section 179? Both new and used equipment for your business, and software costs (including implementation).

If you don’t use the entire Section 179 deduction this year, the excess can not roll over into next year. It’s a “use-it-or-lose-it” situation. Section 179 only applies to purchases made in the current year – prior year purchases do not qualify.

Keep in mind, the Section 179 benefit only takes effect through 2009, after which point deduction rates will go back down to the pre-2006 level of $25,000/year.

As always, consult your accountant or tax professional for details on how Section 179 can benefit your business.