Waiting until 2014 to purchase your ERP?  Think again.  The IRS Section 179 Deduction is set to change significantly on December 31, 2013.  The implications of this program cut may prove to be quite expensive if you plan on waiting until 2014 to purchase new ERP software.

For years, Section 179 has been a vital deduction and an effortless way to save tens of thousands on your ERP software investment.  The deduction applies to software, hardware, and implementation services.  The program also accommodates numerous payment options including: cash, finance, and lease purchase agreements. However, it appears that the days of six-figure deduction limits for Section 179 are over.

Here are the facts:  For 2013, the Section 179 Tax Deduction limit is a hefty $500,000, which means that companies can deduct 100% of their ERP-related investment costs up to a half-million dollars this year.

Here is the inconvenient truth:  For 2014, the Section 179 Tax Deduction limit is set to be slashed 95%, leaving only a $25,000 deduction limit next year.

The consequences of the deduction limit cut in 2014 will be costly for businesses.  Under the proposed plan for next year, companies will not be allowed to write-off capital investments over $25,000, and as a result, it will be significantly more expensive to purchase ERP in 2014.

However, purchasing ERP in 2013 will ensure substantial tax savings and provide a boost for the bottom line.  There are no such assurances for 2014.  An example of the Section 179 tax benefits for 2013 can be seen here:


If purchased this year, an ERP software project costing $150,000 would have over $50,000 cash savings as a result of the the deduction and would bring the effective purchase price under $100,000.

Don’t miss out on the tax savings of 2013!  Purchase your ERP software before the tax incentives end on December 31, 2013. Follow the link below to access a free Section 179 calculator.


Note: Synesis recommends consulting a tax professional to confirm IRS Section 179 Deduction eligibility.