IRS Section 179
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.
2018 Deduction Limit = $1,000,000
This deduction is good on new and used equipment, as well as off-the-shelf software. This limit is only good for 2019, and the equipment must be financed/purchased and put into service by the end of the day, December 31, 2019.
2019 Spending Cap on Equipment Purchases = $2,500,000
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 2019
Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached. Note: Bonus Depreciation is available for new equipment, and now includes used equipment as well. The bonus depreciation is 100% and is good through 2022.
The above is an overall, “simplified” view of the Section 179 Deduction for 2019. As with any major tax deduction, the effect on – or benefit to – your company depends upon many factors.
Consult your tax advisor to learn more about these enhanced programs and see if you can take advantage of these great tax benefits, or use MFS (Manufacturers Financing Services handy tax advantage calculator to see potential tax savings!