Everyone loves a tax break. With the Section 179 Tax Deduction, manufacturers who use industrial automation in their factories can get a tax break on their equipment, used or new.
You can lower your operating costs by jumping on this opportunity for a tax deduction on your equipment. Learn more about Section 179 and how it can benefit your company below!
What is Section 179?
Section 179 is a tax incentive for businesses to deduce the full price on qualified equipment, vehicles, and property. It encourages businesses to buy, lease, or finance equipment, both used and new, and save on tax dollars.
The Section 179 deduction is similar to the depreciation of your equipment so you can get full use out of your industrial robots and manufacturing equipment. If you want to learn more about how to calculate depreciation, check out iGAM’s blog post here.
The difference between depreciation tax cuts and Section 179 is that you can retrieve the full amount of your equipment’s depreciation worth in the same year you purchased the equipment. This allows businesses to buy equipment they need right away rather than having to wait, which boosts businesses and the economy.
What are the limits?
In 2020, the deduction limit is $1,040,000. This involves new and used equipment, including off-the-shelf software, vehicles, and property.
However, there is a spending cap on equipment purchases before the deduction is reduced on a dollar for dollar basis. This year, the spending cap is set at $2,590,000. Section 179 aims to benefit small businesses as opposed to large corporations, as shown by its limitations.
A 100% Bonus Depreciation is available in 2020 for those who qualify, which is explained in detail on the IRS website.
There are a few rules around what equipment can be listed for a tax break:
- Equipment must be purchased for business use and operated within the calendar year it was purchased
- Vehicles used for business at a certain percentage must be deducted at that same percentage (i.e. a vehicle used 60% for business and 40% for personal use must be listed at 60% for the Section 179 tax deduction)
- Equipment and business property cannot be physically attached to the building in order to qualify for a deduction, such as computers or desks
There are more limitations and rules around what qualifies for Section 179, so be sure to read the particulars on the Section 179 website.
Who qualifies for Section 179?
Section 179 is available for all businesses that purchase, lease, or finance qualified equipment, vehicles, or property between January 1 and December 31, 2020. The equipment must be utilized within the same calendar year it was purchased and at least half of its utilization should be for business purposes.
Small businesses will benefit more than large corporations from Section 179 since the limits mirror the purchases of a small business. If you are a small business, use Section 179 to bolster your company and automate your production line!
Use Section 179 to your advantage.
Section 179 expires at midnight on December 31 of every year, so be sure to make your purchases before then and put them to use for your business.
You can invest more into your company by deducing the full price of your equipment, leading to an increase in productivity, efficiency, and revenue.
For more information on Section 179, visit the official website here to find out what your deductions will be for 2020.
Get the manufacturing equipment you need at iGAM!
With tax breaks like Section 179, purchasing equipment for your manufacturing line won’t break the bank.
iGAM has a huge inventory of tested and refurbished industrial equipment and automation. Not only do we offer affordable prices, but our equipment comes with a 20-Month Warranty Coverage to give you peace of mind. If you need help financing, iGAM offers financing services to help you automate your production line.
Contact iGAM today to make a purchase for your facility and get the tax benefits from Section 179!