What is Section 179 Deduction?

2021 Chevrolet Silverado HD with farm equipment

For those who own a business in Cumberland and plan to purchase certain software or equipment that can potentially qualify during the tax year, then you may be interested in learning more about the 2020 section 179 limits. The Section 179 deduction is an IRS tax code that provides an opportunity for businesses, small and large, to deduct the entire purchase price of a qualifying piece of equipment from their gross income. Allow Don Johnson Motors in Rice Lake to introduce to 2020 Section 179 limits and Section 179 vehicles down below. 

What is the Section 179 Deduction? 

Have you heard of the SUV Tax Loophole or “Hummer Deduction”? Well, that’s the Section 179 deduction! This deduction is an incentive from the U.S. government for businesses to buy equipment and reinvest in their businesses as well. The Section 179 deduction in 2020 has proven to provide a form of tax relief and produce real benefits for small businesses. 

How Does the Section 179 Deduction Work? 

Businesses are allowed to purchase a piece of qualifying equipment then write off the full purchase price that same tax year. In the past, the business would split up the amount they wrote off each year to total the full purchase price, now they can do it at one time with the Section 179 deduction. If you’re a small Rice Lake business, if you purchase qualified equipment that costs $40,000, you’re able to write off $40,000 on your taxes. 

2020 Section 179 Limits and Qualifications 

The 2020 Section 179 limits include a cap of total amounts of $1,040,000. Additionally, the 2020 Section 179 limits the total amount of equipment purchased to $2,590,000. But, who qualifies for Section 179? If you’re a Hayward business that purchases, finances, leases, new or used business equipment during the 2020 tax year, you qualify. That’s true under the assumption you’ve spent less than $3,630,000. 

Section 179 Vehicles 

The biggest benefit of Section 179 is that it qualifies used and new equipment. Section 179 vehicles and rules always evolve, here are qualifying vehicles. 

  • Vehicle’s with nine or more seats 
  • Cargo van vehicle types 
  • Heavy construction vehicles 
  • Tractor trailers 
  • Taxis, qualified non-personal use vehicles, etc. 
  • 2020 Section 179 vehicle limits include $11,160 for cars and $11,560 for trucks

Learn More at Don Johnson Motors!

Contact us at Don Johnson Motors if you have any questions about the Section 179 deductions before you purchase a new or used vehicle.

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