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November and December are always busy months in the world of Commercial Equipment Financing. At the urging of their accountants, many of our customers rush to make last minute yearend equipment purchases. Why the big rush you may ask? Well, My Dear Watson, it comes down to the fact that they are running out of time to take advantage of the SECTION 179 TAX DEDUCTION.

What is the Section 179 deduction?

Most people think Section 179 is some complicated and mysterious tax code. Truth is, it is really quite Elementary. Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. Section 179 is an incentive created by the U.S Government to encourage businesses to buy equipment and invest in themselves.

How Section 179 works:

In the past when your business bought equipment, you would write it off a little at a time through depreciation. So, if your company spent $75,000 on a machine, you would write off (say) $15,000 a year for five years (these numbers are only meant to give you an example). While this is great, most business owners would prefer to write off the entire equipment purchase price for the year they buy it. And that is exactly what Section 179 does – it allows your business to write off the entire purchase price of qualifying equipment in the year it was purchased. Section 179 does come with limits, but for most small businesses, the entire cost of qualifying equipment purchases (both new and used equipment) can be deducted up to $1,000,000 in 2019. See your tax professional for details and other limitations.

As a Small Business Owner:

Section 179 offers a simple way to save money on your business taxes. Every business has equipment needs of some kind, so chances are you’ll be able to use Section 179 to claim a significant tax deduction when you purchase the equipment your business needs to operate and grow.

As an Equipment Dealer:

If you are in the business of selling equipment to other small businesses, do your customers know that your products may be 100% tax deductible? All buyers want to save money. But most are not thinking about Section 179 when shopping for manufacturing equipment, construction equipment, vehicles, etc.. So, they are likely not aware of the great tax savings that Section 179 can offer. Be the hero and clue them in.

Whether you are selling or purchasing equipment in 2019, it does not take a great detective to deduce that it may be very beneficial to learn more about Section 179 and how you may be able to use it to your advantage. For more information, consult your tax professional and / or check out websites like SECTION179.ORG

Guy Schwichtenberg

National Account Manager


[email protected]