Maximize Your Buying Power with a Section 179 Tax Deduction
As we approach the final month of 2020—not to mention the holiday season—many businesses are looking to make their last big purchases of the year. If there’s one thing that all equipment buyers have in common, regardless of their industry or position, it’s that they want to save money.
Fortunately, the U.S. government wants this too. In an effort to incentivize American small and mid-sized businesses to invest in their own futures and stimulate our economy as a whole, Section 179 of the IRS tax code was born.
What is Section 179?
A lot of people get overwhelmed by the mere thought of yet another mysterious, complicated tax code. Luckily, Section 179 is neither of those things—and it’s actually quite simple. Essentially, it allows businesses to write off the FULL PRICE of qualifying equipment purchased during the current tax year. Because of this, businesses are able to buy the equipment they need that normally wouldn’t be within their budgets.
What businesses and equipment are eligible?
Any business—regardless of its size—that purchases, finances, and/or leases new or used equipment should qualify for a Section 179 tax deduction. This tax code was designed with American businesses in mind, so almost all types of business equipment will qualify, from machinery and vehicles to computers and office furniture.
We’re incredibly proud to say that all of Quality Forklift’s new and used forklifts and compact construction equipment will qualify for your 2020 Section 179 deduction.
Are there any restrictions?
This is an incentive created by the U.S. government after all, so yes, there are some restrictions. Fortunately, they aren’t all that restrictive. There is, of course, a limit to the amount of equipment you can write off per year—$1,040,000. While business equipment is rarely cheap, this is by no means an insubstantial amount.
Even if you go over that number, they are currently offering a bonus 100% depreciation on an additional $2,590,000 (which phases out on a dollar-for-dollar basis after you reach the limit). While this deduction benefits businesses of all sizes, this cap makes it clear that small and mid-sized companies are the prime focus.
The other major requirement is that the equipment or vehicle purchased needs to be used for business purposes more than 50% of the time to qualify. While we don’t imagine many of our customers are going to be using their forklifts to go grocery shopping or to pick up the kids from soccer practice, this is still a good thing to note. Essentially, if you want to save money on your business equipment, you need to actually use it for your business.
How much can I save?
Like with most things, how much you save depends entirely on how much you spend. Let’s do a quick example:
Let’s say you want to purchase a brand-new forklift that retails for $25,000. That’s certainly a big investment for most businesses. However, if we put that into the Section 179 Tax Deduction Calculator (see above), we can see just how far our savings can go.
Let’s assume our current tax bracket is 35% and that this was our first deduction of the year (thus remaining under the $1.04 million cap). You’ll see that our cash savings are a whopping $8,750. So now you’re getting that $25,000 machine for only $16,250!
It’s time to take advantage
Now that you’ve calculated just how much you can save with your Section 179 tax deduction, it’s time to start taking advantage. Shop our wide selection of new and used forklifts and compact construction equipment today. Just don’t delay—the 2020 tax return period is almost over!
Quality Forklift provides unbeatable service, quality, and value for all your forklift, compact construction, and fabrication needs.