What is the Section 179 Tax Deduction?
Most people think the Section 179 deduction is some mysterious part of a complicated tax code. The truth is, its really simple to understand and take advantage of in your business. The Section 179 Deduction of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment that is purchased or financed during the tax year. That means that if you buy or lease a piece of equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive that the U.S. government created to encourage small business to buy equipment and invest in themselves. Today, Section 179 is one of the few incentives included in the Stimulus Bills that actually helps small businesses.
Prior to the Section 179 deduction, businesses would write off equipment purchases typically a portion at a time through depreciation. For example, if you bought a new truckmount and van for $50,000, you may write off $10,000 over 5 years. The Section 179 Deduction allows you to write off THE ENTIRE PURCHASE for the year you buy it.
To calculate an estimate for tax savings on an purchase amount, check out this link:
The URGENT NOTICE FOR SMALL BUSINESSES is that this deduction is changing dramatically after the end of this year. Section 179 tax deduction has been in place with a cap of $500,000, which is pretty limitless for most of our industry. However, starting next year that deduction for purchases is capped at only $25,000. There are no guarantees that even this limited amount for deductions will be kept in place in the future.
If you are even considering new equipment or fleet vehicles within the near future, it is vital that you are informed about the change in this law coming after December 31st. Call CleanSource for more details on this tax deduction and for great equipment and vehicle packages.
1-803-781-7782 (Columbia, SC) 1-704-525-8181 (Charlotte, NC)