tax forms on desk with blue mouse and coffee mugPer the IRS, Section 179 is a tax code written for businesses. And there are some exciting new changes to it this year. At its core, 179 allows business owners to take full deductions on tangible property (like equipment and machinery) in the year you purchase it. If you’re not using this tax deduction advantage, you could be missing out…in a big way!  

Section 179 encourages you to invest in your business – and in all the craziness of 2020, that can be a pretty enticing incentive. 

So, how does Section 179 work? What are the limits? What, exactly, qualifies? We’re covering all that and more here.  

What is Section 179?

The Section 179 deduction lets you deduct the full purchase price or lease cost of equipment you purchase for your business during the 2020 year. This is different from the past, where you had to write off smaller dollar amounts over a span of multiple years. 

What Qualifies for a 179 Deduction?

Virtually any type of new (even if it’s only new to you!) equipment you use for your business at least 50 percent of the time can qualify. Items must have been purchased, leased or financed, and put into service, between January 1 – December 31, 2020.  

This can include: 

  • Business vehicles that meet the min. weight requirement
  • Computers
  • Equipment used for business operations
  • Machinery
  • Office equipment
  • Office furniture
  • Software
  • Tangible property used for business
  • And potentially more

What Doesn’t Qualify for a 179 Deduction?

There are a few things that you cannot deduct using Section 179, including:

  • Air conditioning and heating units (HVAC)
  • Intangible property – copyrights, patents, trademarks, etc.
  • Inventory
  • Land
  • Permanent structures attached to land – fences, paved parking lots, swimming pools, etc.
  • Property purchased outside the US
  • And potentially more

What is the Section 179 Limit in 2020?

The Section 179 limit in 2020 is capped at $1m. There are also limits to the total amount that can be purchased, as well as stipulations that result in a phase-out of the dollar-for-dollar deduction allowed. You should consult a tax attorney or your CPA for more information. 

Want to take advantage of the Section 179 deduction? Maybe you’re ready to upgrade your OMS? M.O.M. 11 might just be the order and inventory management software you’ve been searching for. Take our quiz to see if you’re ready to take the next step and upgrade your software today! You may be able to use Section 179 to help you!