Find out how your business can take advantage of a new rule when purchasing equipment.
What is the Section 179 Deduction?
Section 179 tax deduction of the IRS Tax Code applies to tax deductions for purchases of certain qualified equipment. In previous years, when a business bought certain equipment, as it depreciated, it was written off over a long period of time. In other words, if your company purchased a $100,000 machine, it would get written off over the next five years. In 2020, the Section 179 deduction, allows businesses to write off the full purchase price for the current tax year.
This means that small and medium-sized U.S. companies can deduct the full price of qualified equipment purchases (up to $1,040,000). In 2020, the deduction applies to both new and used qualified equipment.
Who Qualifies for Section 179?
Section 179 is a government incentive that originally focused on small businesses to medium sized U.S. based companies, and has been included in many of the recent Stimulus Acts and Congressional Tax Bills. It has recently expanded to include all businesses that purchase, finance, and/or lease new or used business equipment. Tax year 2020 qualifies for the Section 179 Deduction.
How does Telematics Equipment Qualify?
In order for the equipment, vehicle(s), and/or software to qualify, they must be used for business purposes more than 50% of the time.This deduction incentive allows companies to experiment with utilizing technologies, like telematics, that improves the efficiency and functions of the business. Investing in the latest technologies can allow your business to grow in efficiency and perform at maximum productivity.
Section 179 is designed to make purchasing/leasing that equipment during this calendar year financially attractive by allowing businesses to write off the entire purchase price. Businesses have used Section 179 to purchase equipment right now, instead of waiting to make the investment.
Disclaimer - This is not financial advice, consult with a qualified tax accountant to fully understand how this rule will impact your business.