Section 179 for 2021
What Is Section 179?
Section 179 for 2021 allows businesses to deduct the full cost of their assets, like commercial vehicles and equipment, in the current tax year rather than depreciating them over their useful life.
Section 179 Deduction has an annual limit. The Tax Cuts and Jobs Act of 2017 commonly known as the “Trump Tax Cuts” increased the maximum tax savings of an individual business from $500,000 to $1,000,000, while also being indexed for inflation.
In 2021, the maximum tax savings is now $1,050,000. This is $10,000 more than it was in 2020.
Types of Vehicles Eligible For Section 179
Section 179 for 2021 tax deduction applies to several types of vehicles such as passenger vehicles, heavy SUVs, trucks, and vans that are used at least 50% of the time for business-related purposes.
Commercial equipment such as sleeper cabs, day cabs, and dump trucks are eligible for the Section 179 tax deduction.
Your commercial trucks and or equipment must be purchased not leased to qualify.
The Section 179 rules state that you must start using your asset in your business to take advantage of the deduction before the end of the current tax year.
If you don’t put the equipment to use in the year you purchased it, you have to wait to claim it the following year after you put it to use.
Can Section 179 Be Taken On Used Vehicles
Can I claim section 179 deductions for used commercial vehicles and equipment? The answer is Yes, as long as a vehicle or equipment is “new to you”, and not purchased from a family member.
The used vehicle has to be used at least 50% of the time for business-related purposes.
Bonus Depreciation For 2021
Bonus Depreciation is useful for larger businesses spending more than the Section 179 Spending Cap which is currently $2,620,000 for 2021 on new equipment.
Bonus depreciation is not always allowed, but thankfully it is allowed for the 2021 tax year.
What Form Do I Use for Section 179
Use IRS Form 4562 to claim your deduction for depreciation and amortization. Make the election under section 179 to expense certain property. Provide information on the business/investment use of automobiles and other listed property
The Bottom Line
Section 179 tax deduction can be a major tax break for business owners like you. Especially if you decide to purchase newer trucks and or equipment before the end of the year.
If you need more details on how IRS Section 179 tax deductions can benefit your business, speak with your accountant or tax advisor before making any big purchases.