The 2018 Deduction is Robust
Congress raised the Section 179 deduction limit for 2018 to one million dollars ($1,000,000). This is more than twice what it was previously, and made 2018 an excellent year to buy, finance, or lease qualifying equipment.
To utilize Section 179 for 2018, the equipment must have been purchased and put into service by midnight 12/31/2018. Use Form 4562 to claim your deduction.
2018 Section 179 Limits
The Section 179 Deduction was $1,000,000 for 2018. So companies can deduct the full cost of qualifying equipment from their 2018 taxes, up to $1,000,000. The "total equipment purchased” limit was 2.5 million (after that is reached, the deduction decreases on a dollar for dollar basis, before disappearing altogether once $3.5 million is spent).
A Tax Break for Small and Medium Businesses
Because the Section 179 “total purchase” limit is $2.5 million, it’s a true small and medium business tax break. This is because larger companies will routinely exceed the limits, and small businesses typically will not. So they reap the benefit (some say Section 179 is the “small business bailout”, and that’s definitely fair.)
About the limits
The only caveat with Section 179 for 2018 is the equipment needed to be purchased and put into service between 1/1/2018 and midnight 12/31/2018.
A look towards the future
The Tax Cut and Jobs Act of 2017 has raised Section 179 to $1,000,000 million dollars, and made the deduction permanent as well. This is great news for small and medium businesses, as they now know the deduction will always be there for them.
But you do need to act to take advantage of Section 179. And to better stretch your dollar, get a quote for Section 179 Qualified Financing.
| Section 179 Deduction Limits for 2018 |
|---|
| Deduction Limit | $1,000,000 |
| Limit on Capital Purchases | $2,500,000 |
| Bonus Depreciation | 100% |
Qualifying Property for Section 179:
- Business equipment of all types including machinery, computers, office furniture, storage tanks, signage, and any other commercial equipment.
- Vehicles designed for commercial-use such as 9+ passenger seats, cargo area of at least 6', or fully enclosed driving compartment with no body section protruding more than 30" ahead of the windshield.
- Vehicles with 6,000+ pounds GVW (gross vehicle weight) qualify for Section 179 but are limited to a $25,000 deduction… basically certain heavy SUVs.
- Off-the-shelf software readily available for purchase by the general public with a non-exclusive license and not substantially modified… note, websites do not qualify.
- Storage facilities and/or structures utilized for agricultural / horticultural purposes (Small disclaimer: main buildings / plants / offices don't qualify. Think movable structures, grain silos, and the like.)
The equipment listed above need not be new – it can be used (but new to you). Almost any "portable" (non-permanently installed) piece of business equipment will likely qualify. If you have any questions on whether something you wish to lease or finance will qualify for Section 179, you can always ask us, or reference IRS Publication 946.
Tax Code Section 179 limits have been modified by various Stimulus Acts over recent years. For further detail, contact your tax adviser or visit www.irs.gov and reference Form 4562.
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