2020 - Section 179
Business owners who acquire equipment for their business: machinery, computers, and other tangible goods, usually prefer to deduct the cost in a single tax year, rather than a little at a time over a number of years. This deduction is known by its section in the tax code, a Section 179 deduction.
Section 179 for 2020
- Deduction Limit = $1,040,000
- Maximum amount of equipment purchased = $2,590,000
2020 Tax Saving Example - Section 179 Deduction
| Cost of Equipment |
$1,150,000 |
| First Year Write Off: $1,000,000 Maximum in 2018 |
$1,000,000 |
| 100% Bonus First Year Depreciation: Updated 100% via 'Tax Cuts and Jobs Act' |
$150,000 |
| Normal First Year Deduction: 20% in each of 5 yrs on remaining amount |
$0 |
| Total First Year Deduction: $1,000,000 + $150,000 |
$1,150,000 |
| Cash Savings: (Assuming - 35% Tax Bracket) |
$402,500 |
| Lowered Cost of Equipment after Tax Savings | $747,500 |
| Congress has released the above figures for 2020 Section 179 Deduction ** | |
Act Now!
If you
want to take advantage of 2020 Section 179 , you must
finance the equipment before Dec 31th, 2020.