Section 179 Tax Credit Calculator (and Deadline)

The Section 179 Credit can save SMBs a lot of money on equipment costs (the deduction is up to a robust $1,050,000). Passenger vehicles exceeding 6,000+ pounds GVW (gross vehicle weight) will usually qualify, but they are typically limited to a $25,000 deduction.

 

Article Summary

  • Section 179 is meant for Small and Mid-sized Companies to write-off the full price of purchased, financed or leased equipment in 2021.
  • The full deduction is $1,050,000 with additional possible savings 
  • The Section 179 deadline for 2021 is 12/31/21 at 11:59 PM and a “put in use” requirement applies.
  • A broad range of new and used equipment, including software, qualifies for Section 179
  • This article includes a Section 179 calculator for 2021
  • 2021 is the best year to date for Section 179 allowances
  • See an IRS fact sheet for Section 179  (FS-2018-9) 
  • Sign the Section 179 Petition to let Congress know you want to keep Section 179 in 2022 and beyond.
  • Section 179 Financing resources are available.

 

Section 179 is for Small and Mid-sized Companies

 

Section 179 is intended to help small and medium sized companies invest in themselves. The full $1,050,000 deduction can be claimed up to the $2,620,000 equipment purchases limit. Once that threshold is met, the deduction decreases dollar-for-dollar, and then reaches zero once $3,670,000 worth of equipment is purchased or financed.

Section 179 Deduction Limits for 2021

Deduction Limit                      $1,050,000

Limit on Capital Purchases   $2,620,000

Bonus Depreciation                         100%

Small and Medium businesses, the lifeblood of the U.S. Economy, are the main beneficiaries of Section 179. Essentially, this tax deduction encourages them to invest in their businesses by buying new (or used) equipment. Section 179 is good for the companies that use the deduction to buy needed equipment, it’s good for the equipment manufacturers who they buy from, and it’s a key driver for our domestic economy.

 

 

2021 Deadline is Midnight 12/31/21 (with conditions)

Please note that to be eligible for a 2021 Section 179 deduction, qualifying equipment must be purchased and put into service by midnight 12/31/2021. Merely buying the equipment by the deadline is not enough. Factor time for supply chain issues and delivery times when buying or using Section 179 Qualified Financing. 

Qualifying Property for Section 179

  • Most physical business equipment (new or used) will qualify for the deduction. This includes production machinery, computers/printers, office furniture, copiers, other office equipment, storage tanks, signage, and most other general equipment.
  • Commercial vehicles usually qualify. This means vehicles with a 6’ cargo area, or a fully enclosed cab-over driving compartment or seating for 9+ passengers.
  • “Heavy equipment” qualifies.
  • Passenger vehicles exceeding 6,000+ pounds (gross vehicle weight) will usually qualify,  but they are typically limited to a $25,000 deduction.
  • Section 179 applies to software that is available for purchase by the general public, and carries a non-exclusive license, without custom modifications. This includes operating systems, office suites and graphics programs. This excludes websites and custom apps or databases, (which, alternately, may be covered under the R&D Tax Credit ).
  • Many storage structures (such as those used for agricultural purposes) will qualify. This will not include a “main” building.
  • Many building improvements like HVAC, alarm and/or fire systems, roofs, and similar can qualify.
  • Preowned versions of the items above (except for software) will typically qualify for Section 179.
  • The equipment listed above need not be new – it can be used. Almost any “portable” (non-permanently installed) piece of business equipment will likely qualify. If you have any questions on whether something you wish to lease or finance will qualify for Section 179, you can always contact us, or reference IRS Publication 946.

 

Section 179 Tax Deduction Calculator

How much can you actually save in total dollars? Use this free Section 179 calculator to find out. It’s updated for 2021, and simple to use. 

Disclaimer: The calculator presents a potential tax scenario based on typical assumptions that may not apply to your business. This page and calculator are not tax advice. The indicated tax treatment applies only to transactions deemed to reflect a purchase of the equipment or a capitalized lease purchase transaction. Please contact us  to determine the tax ramifications of acquiring equipment or software for your business.

 

Complying with Section 179 and Non Qualifying Property 

If you are not sure whether or not your property or equipment should be considered Personal Property or Real Property, contact Millan & Co. to help ensure that you are complying with IRS §179. While the Section 179 Deduction offers a truly valuable advantage to small U.S. businesses, it is up to you to ensure that any deductions you are taking are within the legal requirements of Section 179.

Millan & Co. can assist with the Section 179 Deduction

Our comprehensive approach allows our unique clients to confidently navigate the complexities of taxation as new laws are implemented into the tax code. 

We focus on client satisfaction, delivering high-quality services at fair rates. Schedule a call to learn how we can help you create a strategy that meets your goals. 

Section 179 Petition

Make your voice heard as a small or medium business owner. Sign the Section 179 Petition to let Congress know you want to keep Section 179 in 2022. At the time of this article there are still 2,489 signatures needed to reach the 25,000 required to formalize the petition.

Millan & Co
Personalized Financial and Accounting Services
Peer Reviewed by Texas State
Board of Public Accountancy
812 San Antonio Street
Suite L17
Austin,TX 78701
Phone: 512-479-6819

Share on FacebookTweet about this on TwitterShare on LinkedIn