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Section 179

Equipment purchased in 2019 may qualify for tax deduction

For businesses purchasing equipment in 2019, the Section 179 deduction is easy to apply. It gives businesses an incentive to invest in equipment and software to boost efficiency, lift productive capacity, expand products and services, and grow their revenue.

Section 179 tax deduction for business equipment purchases

Section 179 Tax Deduction

Tax deduction limit is $1 million

  • Most tangible business equipment qualifies.
  • Equipment must be purchased and put into use between Jan. 1 and Dec. 31 of the tax year.
  • You can take full advantage of the deduction when financing equipment.
  • Submit IRS Form 4562 with your tax filing to claim the deduction.

Consult your tax advisor

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Section 179 infographic

Section 179 At a Glance

View our Section 179 infographic for a quick summary of the law.

Section 179 Calculator

Section 179 Calculator

Estimate Your Savings. Section 179 is an easy-to-use tax incentive that helps your business keep more capital.
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*Always contact your tax advisor or visit irs.gov for details.

Section 179: The Google Autocomplete Interview

Mindy Lund and Michelle Fuchs of Stearns Bank answer common questions about the Section 179 tax deduction, based on Google searches.

Section 179 FAQ

What are the Section 179 dollar limits?
The Section 179 annual deduction limit is $1 million. The highest annual investment limit for qualifying equipment purchases is $2.5 million. These limits are indexed to inflation starting in 2019.
Does the purchase date of my equipment have an impact on my deduction?
Yes. The equipment must be purchased (financed/leased) and put into service between Jan. 1 and Dec. 31 of the current tax year to qualify for the deduction.
How do I know if the property I am purchasing or leasing qualifies for the Section 179 deduction?
Consult IRS guidelines or your tax advisor for a list of equipment that qualifies for Section 179.
What are some potential pitfalls of using Section 179?
Section 179 deductions are limited for multiple business entities. And, each state’s laws differ on how businesses can use the deduction. Unique planning is needed based on a small business owner’s tax bracket and cash flow. In addition, selling an asset after the deduction can affect your future tax preparation. Always consult a tax professional before deciding whether to use Section 179.
How does bonus depreciation work under the new format?
Bonus depreciation has increased to 100 percent through 2022. It has also expanded to used property. Bonus depreciation works in conjunction with the Section 179 deduction. You can take your deduction right off the top and then go back and take depreciation off what is left. So, bonus depreciation is taken after the deduction is used. That’s why it is useful for large businesses spending more than the Section 179 spending limit for that year. The bonus depreciation amounts will decrease to 80 percent in 2023, 60 percent in 2024, 40 percent in 2025 and 20 percent in 2026.
How can I calculate my savings by using Section 179?
Use our Section 179 calculator to estimate potential savings.
Can I buy or lease a vehicle and take the Section 179 deduction?
Generally, a vehicle must have a gross vehicle weight of more than 6,000 pounds. For instance, heavy construction equipment, large passenger vans and tractor trailers are the vehicles that qualify.

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Resources

Year-End Business Planning Should Include Section 179

section 179
10/25/2018
Read More

Optometrist Uses Section 179 Tax Deduction To Enhance Practice

section 179
10/12/2018
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The Differences Between Equipment Finance Agreements And Simple Interest Loans

section 179
10/05/2018
Read More

The Basic Process To Apply For Equipment Financing

section 179
09/27/2018
Read More

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Section 179 Calculator

Use our Section 179 calculator to estimate your tax deduction for equipment purchased in 2019. Consult your tax advisor.
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