Section 179

Courtesy Isuzu Truck Center Can Help You Save on Your Taxes

Section 179 IRS Tax Deduction Allows Investment in Your Company Through the Purchase of a New Work Truck

"… In this world, nothing is certain except death and taxes."
Benjamin Franklin

Though it was uttered in 1789, Benjamin Franklin’s famous quote about taxes still rings true today. And it’s always a good time to be thinking about tax implications for the next tax season. Section 179 of the IRS Tax Code allows the deduction of the full purchase price for qualifying equipment, including most medium-duty trucks. No matter the deduction, it is important to consult your tax professional as you determine if a new truck is right for your business.

When you decide it’s time to purchase an Isuzu NPR, NRR, NQR or FTR work truck, the experts at Courtesy Isuzu Truck Center can help you get behind the wheel of a new Isuzu truck.

Section 179 Tax Savings in Phoenix, AZ: How Does it Work?

Thanks to tax reform, unlike other business purchases, equipment eligible for Section 179 does not have to be deducted each year through depreciation. The full amount of the qualifying purchase price can be deducted from the current year’s tax filing as long as the equipment is placed into service before the new year.

Section 179 was designed to be as simple as possible to encourage reinvestment in and stimulate the economy. For the purchase to be eligible for Section 179, there are a few stipulations the equipment must meet:

  • The equipment must be in service by the end of the year.
  • To qualify for the deduction, the medium duty truck also must be used for business purposes more than 50% of the time. To determine if the work truck will meet this guideline, simply multiply the cost of work truck by the percentage of business-use to arrive at the monetary amount eligible for Section 179.
  • The work truck cannot be purchased from a related party or it won’t qualify for the deduction.

Additionally, there are caps to the total amount written off ($1,050,000 for 2021), and limits to the total amount of the equipment purchased ($2,620,000 in 2021). The deduction begins to phase out on a dollar-for-dollar basis after $2,620,000 is spent by a given business (thus, the entire deduction goes away once $3,670,000 in purchases is reached).

All businesses that purchase, finance, and/or lease new or used business equipment during tax year 2021 should qualify for the Section 179 Deduction (assuming they spend less than $3,670,000).

Bonus Depreciation Being Offered for New and Used Trucks in 2021!

Bonus depreciation is offered some years, and in other years it isn’t offered. Businesses can take advantage of 100% bonus depreciation on both new and used equipment for the entirety of 2021.

The most important difference is that both new and used equipment qualify for the Section 179 Deduction (as long as the used equipment is “new to you”), while Bonus Depreciation has only covered new equipment only until the most recent tax law passed. In a switch from recent years, the bonus depreciation now includes used equipment.

Bonus Depreciation is useful to very large businesses spending more than the Section 179 Spending Cap (currently $2,620,000) on new capital equipment. Also, businesses with a net loss are still qualified to deduct some of the cost of new equipment and carry-forward the loss.

When taking advantage of Section 179, the business must include a brief description of the truck, the total cost, and the amount to be deducted through Section 179 within Part I of the IRS Form 4562. The amount being claimed as Section 179 should be included on Line 6 of Form 4562.

What Cost Savings Could My Business See?

Nothing can take the place of good advice from your tax professional or someone who understands the implications of Section 179 as it relates to your tax situation. However, here is an example of the tax savings on a $50,000 purchase. This calculator can help you determine how much you’ll save.  

Ready to Learn More?

The medium-duty truck experts at Courtesy Isuzu Truck Center can help you find the perfect Isuzu truck in Phoenix, AZ. Call us at 866-980-4543, submit your question online, or stop by, at 4999 North 12th St., Phoenix, AZ 85014. 

Section 179 Calculator