Tax Rule 179

Also, it my be the last thing you would want to think about, especially this year. But now is the time to take advantage of year-end tax strategies. Purchasing new software/equipment for your business, or adding new licenses, could be a smart, year-end tax move.

Taking the advantage now, could benefit your company in the coming years.

For 2020

Deduction Limit = $1,040,000.00

This deduction is good on new and used equipment, as well as off-the-shelf software. To take the deduction for tax year 2020, the equipment must be financed or purchased and put into service between January 1, 2020 and the end of the day on December 31, 2020.

Spending Cap on equipment purchase = $2,590,000.00

This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis. This spending cap makes Section 179 a true “small business tax incentive” (because larger businesses that spend more than $3,630,000 on equipment won’t get the deduction.)

Bonus Depreciation: 100% for 2020

Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached. The Bonus Depreciation is available for both new and used equipment.

For more information about Tax Rule 179. Always consult your tax accountant for your individual business needs.