Section 179

Overview

Section 179 is the IRS Deduction and Bonus Depreciation program created to help small to medium size businesses buy or lease new commercial trucks (Not all trucks and GVWs qualify).

Simply put… most businesses pay Federal Income Tax on every dollar of net income. In the past, when a business bought a truck, they could only depreciate the vehicle 20% a year, this meant that it would take five years to realize the full benefit. Section 179 allows a business to take 100% of the depreciation of the truck this year!

2020 Deduction Limit = $1,040,000

This deduction is good on new and used equipment, as well as off-the-shelf software. To take the deduction for tax year 2020, the equipment must be financed or purchased and put into service between January 1, 2020 and the end of the day on December 31, 2020.

2020 Spending Cap on equipment purchases = $2,590,000

This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis. This spending cap makes Section 179 a true “small business tax incentive”.

Bonus Depreciation: 100% for 2020

Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached. The Bonus Depreciation is available for both new and used equipment.