Tax Deductions for Small Businesses

Tax Deductions for Small Businesses

Thanks to the guidelines under IRS Section 179 of the IRS tax code, many small businesses that invest in new equipment can write off up to $1 MILLION worth of these purchases on their IRS tax returns for vehicles placed in service by Dec. 31st.* Learn more at https://www.section179.org/.

 

Normally, small businesses spread these deductions over several years, but the tax benefits provided under IRS Section 179 allow many small businesses to write off up to $1 MILLION of qualifying new equipment in the first year it is placed in service.*

 

What is the Section 179 Deduction?

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.

 

Who Qualifies for Section 179?

All businesses that purchase, finance, and/or lease new or used business equipment during tax year 2019 should qualify for the Section 179 Deduction (assuming they spend less than $3,500,000).

Most tangible goods used by American businesses including business-use vehicles (restrictions apply) qualify for the Section 179 Deduction.

To qualify for the Section 179 Deduction, the vehicle must be placed into service between January 1, 2019 and December 31, 2019.

 

Section 179's "More Than 50 Percent Business-Use" Requirement

The vehicle(s) must be used for business purposes more than 50% of the time to qualify for the Section 179 Deduction. Simply multiply the cost of the vehicle(s) by the percentage of business-use to arrive at the monetary amount eligible for Section 179.

Limits of Section 179

Section 179 does come with limits - there are caps to the total amount written off ($1,000,000 for 2019), and limits to the total amount of the equipment purchased ($2,500,000 in 2019). The deduction begins to phase out on a dollar-for-dollar basis after $2,500,000 is spent by a given business (thus, the entire deduction goes away once $3,500,000 in purchases is reached), so this makes it a true small and medium-sized business deduction.

 

*NOTE: The information supplied here is provided as a public service. It should not be construed as tax advice or as a promise of potential savings or reduced tax liability. Individual tax situations may vary. Federal rules and tax guidelines are subject to change. For more information about the Section 179 expense write-off or other business vehicle expense write-offs, you should consult your tax advisor for complete rules applicable to your transaction and visit the Internal Revenue website at www.irs.gov.

*This analysis applies only to vehicles placed in service in the United States after December 31, 2018 and by December 31, 2019 with no written binding contract for acquisition in effect before January 1, 2019. Consult your tax advisor as to the proper tax treatment of all business-vehicle purchases. Not all buyers will qualify for all offers. Available at participating dealers only. For all offers, take new retail delivery from dealer stock by 12/31/2019. See dealer qualifications and complete details.