Tax Code Section 179
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Section 179 of the IRS tax code allows businesses to deduct the FULL purchase price (up to $1,000,000) of qualifying equipment and/or software purchased or financed during the tax year.
What is Section 179?
From the official section 179 website, “Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.
Today, Section 179 is one of the few incentives included in any of the recent Stimulus Bills that actually helps small businesses. Although large businesses also benefit from Section 179 or Bonus Depreciation, the original target of this legislation was much-needed tax relief for small businesses – and millions of small businesses are actually taking action and getting real benefits.”
What Qualifies for Section 179
All businesses that purchase, finance, and/or lease less than $2,500,000 in new or used business equipment during tax year 2018 should qualify for the Section 179 Deduction. Here is a list of types of equipment that can qualify:
- Some vehicles (restrictions apply)
- Office Furniture
- Office Equipment (pens, copy paper, envelopes etc.)
- Building Renovations/Improvements (HVAC upgrades, new roof, new carpet etc.)
- Business Property Purchases (restrictions apply)
- And more!
Most tangible goods including “off-the-shelf” software and business-use vehicles (restrictions apply) qualify for the Section 179 Deduction. Also, to qualify for the Section 179 Deduction, the equipment and/or software purchased or financed must be placed into service between January 1, 2018, and December 31, 2018. To learn more about the specifics of software requirements click here.
The deduction begins to phase out if more than $2,500,000 of equipment is purchased – in fact, the deduction decreases on a dollar for dollar scale after that, making Section 179 a deduction specifically for small and medium-sized businesses.
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$1,000,000 New Equipment Deduction for Small Businesses | Tax Code Section 179
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