The Section 179 tax deduction allows a business to write off the entire cost of new equipment purchases, up to $1,040,000. This tax deduction is why many businesses opt to make a year-end purchase, as it provides a great opportunity to expand or update their forklift fleet.
In the past, businesses were able to write off the cost of new forklifts and other material handling equipment over the life of the equipment through depreciation. With the Section 179 Tax Deduction, businesses can write off the entire cost of new equipment upfront, instead of spreading the deduction over a long period of time.
Overall savings will vary depending on many factors. Section 179 allows a business to achieve upfront tax savings instead of waiting for the equipment’s depreciation cycle to advance over time. Use the 2020 Section 179 Tax Deduction Calculator to determine your estimated cash savings.
According to Section 179, the entire cost of new or used material handling equipment that is either leased or financed and put into use within the tax year will qualify. All qualifying equipment must be used for business purposes for more than 50% of the time, according to Section 179. For 2020 Section 179 has a limit that businesses can write off, which is $1,040,00. Any amount a business spends over the cap of $1,040,000 is eligible to be deducted the following year through Bonus Depreciation (up to $2,590,000).
Bonus depreciation is available in 2020 at 100%. Bonus depreciation isn’t offered every year, and the rate of depreciation varies. The bonus depreciation allows any costs over the 2020 $1,040,000 deduction cap, up to $2,590,000 to be deducted the following year.
If you want to take advantage of this tax deduction, you must do so before the December 31, 2020 deadline. Contact us today to learn more about the tax deduction.