Section 179 Deduction

The Section 179 Deduction is a tax benefit for businesses. The IRS manages this benefit. If your business buys or leases less than $2.5 million in equipment, you can qualify for this deduction.

• Deduction limit: You can deduct up to $1 million in the year you first buy or lease the equipment.
• Equipment coverage: Covers both new and used equipment. Bonus depreciation only covers new equipment.
• Usage requirement: Equipment must be used for business purposes more than 50 percent of the time.
• State tax credits: You cannot claim this deduction if you have claimed state tax credits for your equipment.
• Special areas: Businesses in special areas, like the Liberty Zone and Empowerment Zones, can deduct an extra $35,000.

Most tangible goods qualify for the Section 179 Deduction, including:

• Equipment (machines, etc.) purchased for business use
• Tangible personal property used in business
• Business vehicles with a gross vehicle weight over 6,000 pounds
• Computers
• Off-the-shelf computer software
• Office furniture
• Office equipment
• Property attached to your building that is not a structural component (for example, a printing press, large manufacturing tools and equipment)
• Equipment used for both business and personal use (the deduction is based on the percentage of time you use the equipment for business)