All businesses that buy or lease less than $2.5 million in equipment qualify for the deduction. A business can deduct up to $1 million in the year the equipment is first bought or leased. Bonus deductions are available until 2022 for equipment that exceeds the deduction limit. The deduction is taken before the bonus.
The Section 179 Deduction covers new and used equipment. The bonus depreciation covers only new equipment. The equipment must be for business purposes more than 50% of the time to qualify.
You cannot claim this credit if you have claimed state tax credits for your equipment. Businesses in some areas, including the Liberty Zone and Empowerment Zones, can deduct an additional $35,000.
Most tangible goods qualify for the Section 179 Deduction, including (but not limited to):
- Equipment (machines, etc) purchased for business use
- Tangible personal property used in business
- Business Vehicles with a gross vehicle weight in excess of 6,000 lbs
- Computer Software (off the shelf)
- Office Furniture
- Office Equipment
- Property attached to your building that is not a structural component of the building (e.g. a printing press, large manufacturing tools and equipment)
- Partial Business Use (equipment that is purchased for business use and personal use - generally, the deduction will be based on the percentage of time you use the equipment for business purposes.)
Instructions for Depreciation and Amortization (Form 4562) (PDF)
Application for Section 179 Depreciation and Amortization (Form 4562) (PDF)
Internal Revenue Service (IRS) Homepage
Section 179 - General Information
Section 179 List of Qualifying Equipment
Section 179 Vehicle Deductions
For more information, contact:
Taxpayer Assistance Center
New York, NY 10007
Phone: (212) 4361000
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