Section 179 Explained
What is Section 179?
Taking the cost of the equipment as an immediate expense deduction allows the business to get an immediate break on their tax burden whereas capitalizing then depreciating the asset allows for smaller deductions to be taken over a longer period of time. The Section 179 expensing method is offered as an incentive for small business owners to grow their businesses with the purchase of new equipment.
- Section 179 of the IRC allows businesses to take an immediate deduction for business expenses related to depreciable assets such as equipment, vehicles, and software.
- This allows businesses to lower their current-year tax liability rather than capitalizing an asset and depreciating it over time in future tax years.
- Section 179 is limited to a maximum deduction of $1,050,000 and a value of the property purchased to $2,620,000 for the year 2021.