What is 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 if you finance a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. This deduction is good on new and used equipment, as well as off-the-shelf software. To take the deduction for tax year 2019, the equipment must be financed or purchased and put into service between January 1, 2019 and the end of the day on December 31, 2019. This deduction is not automatic and must be elected. In order to elect to take the deduction, you’ll need to fill out Part 1 of IRS form 4562.
All businesses that purchase, finance, and/or lease new or used business equipment during tax year 2019 should qualify for the Section 179 Deduction (assuming they spend less than $3,500,000). Congress has stopped the Section 179 roller coaster of the past few years, and has made the Tax Deduction limit permanent. The limit was raised to $1,000,000 for 2019 and beyond. This is wonderful news for small and medium businesses, as they know early in the year that the deduction will be there for them.