2020 Section 179 Tax Deduction
Equipment Leasing Quick Tips

Section 179 Yearly Tax Deduction

What is Section 179 Tax Deduction?

Section 179 of the United States Internal Revenue Code is a tax deduction that enables businesses to depreciate assets as an expense in the first year or the year they purchased an asset. All assets must be put to use by December 31 of the 2020 tax year.

Why should I care about this tax deduction?

In 2020, your business can deduct the full cost of qualified equipment purchases, up to $1,040,000, with a “total equipment purchase” limit of $2,590,000.

Besides, you can take advantage of 100% Bonus Depreciation on the “new to you” equipment this year.

How to calculate my savings from Section 179?*

A rule of thumb is to multiply the price of your equipment by your tax bracket. For example,

Equipment Purchase$1,150,000
First Year Write-Off$1,040,000
100% Bonus Depreciation$110,000
Normal First-Year Depreciation$0
Total First Year Deduction$1,150,000
Cash Savings (assuming a 35% tax bracket)$402,500
Equipment Cost After Tax $747,500$747,500
Example of Tax Deduction Calculation under Section 179, 2020

What qualifies as Tax Deductible assets under Section 179?

  • Tangible property or hard assets (such as machines, equipment, furniture)
  • Single-purpose agricultural or horticultural structures
  • Storage facilities
  • Off-the-shelf computer software placed in service during the tax year

What are the requirements?

  • New or Used equipment with a total price of up to $2,590,000
  • Must be acquired for business use
  • Must be put to use before December 31st, 2020

How can I benefit from this Tax Deduction?

AFG offers financing and leasing solutions that are compatible with Section 179. Benefit from tax savings this year and pay for your equipment over time.

Get a free quote on equipment financing today.

*The information on this site is for illustrative purposes only. Please consult with a qualified tax advisor concerning your specific situation.