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SECTION 179 TAX DEDUCTION

Eligible business owners can write off up to $1,160,000 for any new or used trucks purchased, financed, or leased and put into service in 2023.

Spending Cap

A maximum of $2,890,000 can be spent on eligible equipment before the available tax deduction is reduced.

Bonus Depreciation

  • An 80% bonus depreciation is available for new and used equipment after the spending cap has been reached.

  • The bonus depreciation is retroactive to September 27, 2017, and is applicable through 2023.

Consultation with Tax Advisor

The advice is given to encourage business owners to contact their tax advisor for more personalized information regarding the 2023 Section 179 deduction and specific qualification details.

WHAT IS THE SECTION 179 DEDUCTION?

The Section 179 deduction is a tax incentive in the United States that allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. The purpose of Section 179 is to encourage businesses to invest in themselves by providing an immediate tax benefit for the acquisition of eligible business assets.

Key points about the Section 179 deduction include:

  1. Qualifying Property:

    • The deduction is generally applicable to tangible personal property used for business purposes, such as machinery, equipment, vehicles, and certain software.

  2. Deduction Limit:

    • The deduction limit is set by the IRS and can vary from year to year. For the 2023 tax year, as per the information you provided, the limit is up to $1,160,000.

  3. Spending Cap:

    • There is a spending cap on the total amount of equipment purchases that can be eligible for the Section 179 deduction. In the information provided, it's mentioned that a $2,890,000 maximum can be spent on eligible equipment before the available tax deduction is reduced.

  4. Bonus Depreciation:

    • In addition to Section 179, businesses may also benefit from bonus depreciation. This allows for an additional deduction of a percentage (in this case, 80%) of the cost of qualifying property after the spending cap has been reached.

  5. Application to New and Used Property:

    • The Section 179 deduction is not limited to new equipment; it can also be applied to used equipment that meets the eligibility criteria.

  6. Consultation with Tax Advisor:

    • Given the complexity of tax laws and individual business situations, it's strongly recommended that businesses consult with their tax advisors to ensure they qualify for the Section 179 deduction and to determine the optimal strategy for their specific circumstances.

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It's important to note that tax laws and regulations can change, so staying informed about the current rules and consulting with tax professionals is crucial for maximizing the benefits of the Section 179 deduction.

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