Section 179 of the U.S. tax code can present a welcome opportunity for small-business owners at tax time. An economic incentive designed to encourage the purchase of business-related equipment in order to spur growth in the economy, Section 179 lets some taxpayers deduct the full or partial cost of certain types of property from their federal taxes for the year the property was purchased and put into service. To see if you qualify, contact a certified tax professional.
Congress approved a bill in 2015 to permanently raise the Section 179 aggregate deduction limit to $500,000 on qualifying equipment. “Qualifying equipment” in this case is defined by the IRS as machinery, computers, office furniture, software and so on. Visit the IRS website to see the list of purchases that qualify.
While many people can and do apply the Section 179 deduction to vehicles purchased for business reasons, business owners should keep in mind that there may be restrictions in place for this type of purchase.
Under Section 179 vehicles unlikely to be used for personal use qualify for the full deduction (those with a fully enclosed driver’s compartment/cargo area, for example), passenger vehicles are subject to certain deduction limits, even if they’re used for work more than 50% of the time. Similarly, SUVs, trucks and vans that do not meet specific IRS guidelines are also subject to limitations.
If you purchased or plan to purchase a new work vehicle in 2017, you may benefit from Section 179.* Consult a certified tax preparer to see the estimated Section 179 expense allowances for Chrysler, Dodge, Jeep®, Ram and FIAT® Brand vehicles.
Remember, if you want to take advantage of Section 179 during the current tax year, vehicles must be purchased and put into service by December 31, 2017. So don’t hesitate – contact your local BusinessLink dealer for help picking out the right work vehicle for your small business.
*Be sure to consult a certified tax preparer to understand how a vehicle purchase will affect the taxes of your business and visit http://www.section179.org/section_179_deduction.html for more information.