What is the Section 179 Deduction and How Does it Apply to Commercial Truck Purchases
Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying commercial trucks purchased or financed during the tax year. That means that if you buy (or lease) a commercial truck that qualifies, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.
Here’s How Section 179 works
In years past, when your business bought a qualifying commercial truck, it typically wrote it off a little at a time through depreciation. In other words, if your company spends $50,000 on a truck, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example).
Now, while it’s true that this is better than no write-off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it.
And that’s exactly what Section 179 does – it allows your business to write off the entire purchase price of a qualifying commercial truck for the current tax year.
This has made a big difference for many companies (and the economy in general.) Businesses have used Section 179 to purchase needed trucks right now, instead of waiting. For most small businesses, the entire cost of qualifying trucks can be written-off on the 2019 tax return (up to $1,000,000).
Limits of Section 179
Section 179 does come with limits – there are caps to the total amount written off ($1,000,000 for 2019), and limits to the total amount of the equipment purchased ($2,500,000 in 2019). You also must take position of the equipment before the end of the year.
Who Qualifies for Section 179?
All businesses that purchase, finance, and/or lease new or used commercial trucks during tax year 2019 should qualify for the Section 179 Deduction (assuming they spend less than $3,500,000).
Please note. We are not tax professionals and there are always limitations to any tax deduction. Please contact your tax professional about Section 179 to find out if you qualify for this deduction.