How to Get Tax Savings Benefits [+ Free Section 179 Tax Savings Calculator]

Keilyn Mancilla
By Keilyn Mancilla
Nov 13 / 264 Views

Are you thinking of expanding your business but aren’t sure if it fits into your budget? If so, the Section 179 tax deductions can save your business thousands of dollars when you finance new or used equipment. Under the Section 179 tax deduction, small business owners get an upfront tax break when they buy qualifying new or used equipment in the calendar year. Here’s what you need to know.

What is Section 179?

Taxes and deductions can be confusing, so we’ve broken down the Section 179 tax deduction to make it as simple as possible, so you can focus on what matters. The Section 179 tax deduction allows a business to deduct all or part of the purchase price of certain qualifying equipment that is acquired during that tax year. The incentive was put into place to motivate small businesses to invest in themselves through acquiring equipment. You can increase your business’ efficiency while putting money back into your pocket; it’s a win-win.

How it works:

  1. Finance qualifying new or used equipment before December 31st, 2019
  2. If your taxable business income for the year meets or exceeds $1 million, you may qualify for a $1 million deduction with $2.5 million spending cap
  3. Save on your taxes this year and improve cash flow next year

Typically, when your business acquires equipment, tax deductions are realized over the useful life of the equipment. With Section 179, your business is able to write off the entire equipment purchase the year in which it is acquired. Unlike normal depreciation, Section 179 helps to accelerate tax deductions so your business benefits now. Look at this example:

Tax Savings Increase with 2019 Deduction Limits: 2019 IRS Section 179 Updates

See how much you can save with the Section 179 Tax Savings Calculator.

Key Section 179 Takeaways

  • You can deduct the full price of qualifying equipment up to $1 million in equipment costs*
  • You can spend up to $2.5 million on qualifying equipment
  • Section 179 lets you get your entire depreciation deduction in the same year of the equipment purchase
  • Equipment only applies for Section 179 if it is tangible personal property used in your business long-term more than 50% of the time

What Section 179 Means for You

As a small business owner, you have the opportunity to expand your business this year so you can put your equipment to work now. By combining the Section 179 tax benefits with financing, obtaining new or used equipment can more easily fit into your 2019 budget. Now that you know what your tax savings could be, start gaining benefits before the end of the year. Plan for success in 2020 with Section 179 tax savings!

Learn more about Section 179 is and how it traditionally helps businesses expand. Contact your trusted tax advisor with specific Section 179 questions. Keep in mind that Section 179 Tax Dedcution changes every year. Learn more about 2019 Section 179 updates.

*You qualify for the $1 million deduction, if your taxable business income for the year meets or exceeds $1 million.

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