If you’re a business owner, leasing equipment can be a great way to save money and maximize your tax benefits. By leasing instead of buying equipment outright, you can take advantage of significant savings on both immediate costs and long-term expenses. In addition to saving money upfront, several tax deductions come with leasing commercial or industrial equipment for your business. Let’s explore the different tax benefits of leasing business equipment so you can maximize your savings.

IRS Deductions

One of the most significant tax advantages to leasing business equipment is that it allows you to take an immediate deduction. The Internal Revenue Service (IRS) permits businesses to deduct up to 100 percent of their lease payments in the year they are made, as opposed to taking a depreciation write-off for equipment purchased upfront. This means that by leasing equipment, you can receive a greater tax benefit in the present instead of waiting years to take advantage of depreciation.

Avoid Upfront Costs

Another advantage of leasing commercial and industrial equipment is that it allows you to avoid large upfront capital expenditures. Business owners who lease their equipment are not required to pay for the entire cost upfront, which means that more cash can be kept on hand for other business endeavors. Furthermore, leasing can help to avoid expensive repairs or upgrades that are needed when purchasing outdated equipment.

Flexibility

Lastly, leasing business equipment can offer flexibility which is beneficial for businesses that need to upgrade their equipment regularly. With lease agreements, you will have the option to trade in your current equipment for newer models if you need an upgrade. This allows businesses to keep up with the latest technology without spending additional money on new equipment.

Overall, leasing business equipment can provide substantial tax savings as well as several other advantages, such as avoiding large upfront capital expenditures and having flexibility when it comes to upgrading. So, if you are considering purchasing or leasing business equipment, be sure to factor in the potential tax benefits before deciding. Contact MAI Capital today to explore our equipment leasing options.