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Ask one of our financing experts about what is covered by Section 179 and how it would save you money on your 2019 taxes. Just fill out a Quick Quote.
The IRS Section 179 Deduction is ideal for small to medium-sized businesses. It allows businesses to write off equipment and software purchases as a tax incentive.
Take advantage of the tax benefits of Section 179 before the end of 2019 with financing from Dimension Funding. We offer the lowest rates possible with extended terms. Get the equipment or software that your business needs while substantially lowering your taxes.
The tax benefits could be more than what you would pay in the first year of a lease.
The following is an overall, “simplified” view of the IRS Section 179 Deduction for 2019. For more details on limits and qualifying equipment, as well as IRS Section 179 Qualified Financing, please fill out a “Quick Quote” request or call us.
This deduction is good on new and used equipment, as well as off-the-shelf software. This limit is only good for 2019, and the equipment must be financed/purchased and put into service by the end of the day, 12/31/2019.
This is the maximum amount that can be spent on equipment before the IRS Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis.
This spending cap makes Section 179 a true “small business tax incentive”.
Bonus Depreciation is generally taken after the IRS Section 179 Spending Cap is reached.
So after you reach the spending cap of $2,500,000, you can take Bonus Depreciation.
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Depreciation is usually spread out over the life of the asset. Under Section 179, you can write off equipment or software in the year that you purchase it (for qualifying equipment / software).
One of the purposes of Section 179 is to encourage businesses to purchase more equipment this year instead of waiting over the next few years. It stimulates the American economy (and your business) to move in a positive direction. For most small businesses, the entire cost can be written-off on the 2019 tax return (up to $1,000,000).
IRS Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.
Several years ago, IRS Section 179 was often referred to as the “SUV Tax Loophole” or the “Hummer Deduction” because many businesses have used this tax code to write-off the purchase of qualifying vehicles at the time (like SUV’s and Hummers). But, that particular benefit of IRS Section 179 has been severely reduced in recent years, see ‘Vehicles & IRS Section 179 for current limits on business vehicles.
Today, IRS Section 179 is one of the few incentives included in any of the recent Stimulus Bills that actually helps small businesses. Although large businesses also benefit from IRS Section 179 or Bonus Depreciation, the original target of this legislation was much needed tax relief for small businesses – and millions of small businesses are actually taking action and getting real benefits.
IRS Section 179 does come with limits – there are caps to the total amount written off ($1,00,000 for 2019), and limits to the total amount of the equipment purchased ($2,500,000 in 2019). The deduction begins to phase out dollar-for-dollar after $2,500,000 is spent by a given business, so this makes it a true small and medium-sized business deduction.
All businesses that purchase, finance, and/or lease less than $2,500,000 in new or used business equipment during tax year 2019 should qualify for the IRS Section 179 Deduction.
Most tangible goods including “off-the-shelf” software and business-use vehicles (restrictions apply) qualify for the IRS Section 179 Deduction. For basic guidelines on what property is covered under the IRS Section 179 tax code, please contact one of our financing experts. Also, to qualify for the IRS Section 179 Deduction, the equipment and/or software purchased or financed must be placed into service between January 1, 2019 and December 31, 2019.
The deduction begins to phase out if more than $2,500,000 of equipment is purchased – in fact, the deduction decreases on a dollar for dollar scale after that, making IRS Section 179 a deduction specifically for small and medium-sized businesses.
Bonus depreciation is being offered in 2019 at 100%. The most important difference is both new and used equipment qualify for the IRS Section 179 Deduction (as long as the used equipment is “new to you”), while Bonus Depreciation covers new equipment only.
Bonus Depreciation is useful to very large businesses spending more than the IRS Section 179 Spending Cap (currently $2,500,000) 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 applying these provisions, IRS Section 179 is generally taken first, followed by Bonus Depreciation – unless the business had no taxable profit, because the unprofitable business is allowed to carry the loss forward to future years.
The equipment, vehicle(s), and/or software must be used for business purposes more than 50% of the time to qualify for the IRS Section 179 Deduction. Simply multiply the cost of the equipment, vehicles, and/or software by the percentage of business-use to arrive at the monetary amount eligible for IRS Section 179.
The information provided on IRS Section 179 is informational only and not intended to express a legal view or replace your accounting professionals.
Dimension Funding has been providing financing to small and medium-sized businesses for over 40 years. We are a leader in providing financing for the purchase of equipment and software.
We work with businesses across industries to provide financing at the best rates and terms possible.
Most of our staff have been with us for 10 years or more. Much of our sales team has been with us for over 20 years. We have a corporate culture that fosters longevity, not only internally, but with our vendors and borrowers. Many of our clients have been with us for years.