Navigating The Section 179 Tax Deduction At The End of 2021
What you need to know about buying equipment at the end of 2021
Interested in purchasing equipment but have questions on Section 179 of the IRS Tax Code? You aren't alone. With the end of the year quickly approaching, it's time for heavy equipment owners to start thinking about how they would like to take advantage of the Section 179 tax deduction. But we know it can be confusing. That's why we created this guide to help you in your quest for that next perfect machine for your fleet.
First of all, what is Section 179?
IRS Section 179 was started with the intention of helping businesses acquire equipment, software, and other business assets by enabling them to deduct the cost in one year. As long as your business equipment has been put into service that year, the deduction simplifies taxes for your business as well as helps your company financially.
How much can I spend, and what savings opportunities are there for my business?
Whether you intend to buy, finance, or lease, you may be qualified to take advantage of substantial tax savings in 2021. For U.S.-based businesses, Section 179 of the IRS Tax Code allows a business to write off up to 100% of the cost of new and used qualifying equipment purchases.
This year, the Tax Cuts and Jobs Act raised the deduction limit to $1,050,000 with an equipment spending cap of $2,620,000. This is up from the $1,040,000 deduction limit and $2,590,000 spending threshold in 2020.
So, how do I qualify?
To qualify for the Section 179 tax deduction, eligible equipment must be purchased, financed, and put into service by midnight on December 31st, 2021.
Eligible property includes tangible personal property or other tangible property, used at least 50% for business. For heavy equipment owners, both new and used heavy equipment will qualify for the tax deduction.
Is Section 179 just for heavy equipment?
The Section 179 tax deduction goes beyond heavy equipment, in fact. Other eligible property includes the following types of depreciable property:
- Tangible personal property and other tangible property
- Single-purpose agricultural structures
- Storage facilities for petroleum
- Off-the-shelf computer software
- Or qualified Section 179 "real property."
In essence, machinery, office equipment and furniture, off-the-shelf software, business vehicles, and some property improvements will qualify for the deduction. So, you could purchase a new desk for your office while you pick out the new excavators for your fleet!
What do I do to claim my Section 179 deduction?
You will need to claim your Section 179 deductions on IRS form 4562. Go to irs.gov or talk with your tax preparer to complete.
How can Newman Tractor support?
We are here to help you in all of your heavy equipment needs, including planning for the future of your fleet. And that means we will walk with you as you navigate Section 179 too. If you're thinking of taking advantage of the tax deductions available to you, reach out and see how we can serve you in the process!
- Come walk the lot with your NT sales rep to see what we have in stock
- Work with your NT sales rep to find the right machines to add to your fleet
- Check with us about what financing and leasing options are available to you
- Trade in your old machines for new machines
- Other questions? We are here to serve!
We hope this guide has been helpful for you in navigating IRS Section 179! As always, please check with your tax professional or see IRS Publication 946 for the latest information on Section 179.
We are always happy to help! Feel free to give us a call for more questions on flexible leasing and financing that makes it easy to acquire that perfect new machine for your business. For more questions, contact us at 859.485.8500!
**Note: Information provided in this document is for illustrative purposes only. Newman Tractor and its owners, agents, employees, affiliates, suppliers, and partners are not tax advisors. This document is not intended to offer any tax advice. Please consult with qualified tax professionals concerning your specific situation.**