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Section 179 FAQs
FAQs – Section 179 Deduction & Bonus Depreciation
Section 179 of the IRS Tax Code allows a business to deduct, for the current tax year, the full purchase price of equipment and off-the-shelf software that qualifies for the deduction.
The Section 179 limit for 2023 is $1,160,000. This is the total amount of eligible equipment that can be deducted, and the ‘total equipment purchased’ by a business cannot exceed $2,890,000. Once the equipment purchased exceeds that number, the deduction reduces on a dollar for dollar basis.
Absolutely. In fact, using Section 179 Qualified Financing is a very effective strategy, as the deduction you take may actually exceed the total loan or lease payments you make for the yeas.
Yes. To qualify for the Section 179 deduction for any given tax year, the equipment must be purchased (or financed / leased) and placed into service between January 1 and December 31 of that year.
Most tangible equipment that businesses purchase or lease will qualify for the deduction. Please review our page of equipment that qualifies for Section 179.
Yes, Section 179 can be used every year. It was made a permanent part of our tax code with the Protecting Americans from Tax Hikes Act of 2015 (PATH Act).
Here’s a very easy-to-use Section 179 Deduction Calculator that will help you figure out your potential savings.
Almost any business use vehicle will qualify for Section 179, including heavy equipment. The vehicle generally needs to exceed 6,000 lbs in GVW (gross vehicle weight). Visit our Section 179 and Vehicles page for more information.
Yes! As long as the vehicle is a qualifying vehicle (meaning it exceeds 6,000 lbs. in Gross Vehicle Weight). Financing or leasing a vehicle does not affect section 179. See our Section 179 and Financing page for more details.
Bonus Depreciation is taken after the Section 179 deduction is taken. Thus, it is useful to very large businesses spending more than whatever Section 179’s spending limit is for that year. Also, businesses with a net loss in a given tax year qualify to carry-forward the Bonus Depreciation to a future year. When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation – unless the business has no taxable profit in the given tax year.
To elect the Section 179 Deduction you need to fill out ‘Part One’ of IRS form 4562 (available here). If you need help, your tax preparer will be able to help you elect the Section 179 Deduction.
We’ve archived all of the Section 179 limits for previous years, and even include links to calculators for amended returns
Yes. The Section 179 limits have risen and fallen over the years, with Congress often making businesses wait before raising it with the various stimulus acts over the years. That has ended, with the deduction being made permanent in 2015, and enhanced in 2017. On this page, we’ve archived some of the various stimulus acts.