Section 179 Provides Tax Deductions for Software Purchased thru December 31, 2019
As we move through Q4, we plan for 2020 and think about taxes. Many of us spend time digging through receipts, looking for deductions. Fortunately small- to medium-size businesses can get a nice year-end bonus: Section 179.
Section 179 is part of the U.S. tax code that allows up to a $1,000,000 (one million dollars) tax deduction. Congress reauthorized the Section 179 tax deduction with a limit of $500,000 for tax year 2017 and doubled this in 2019—a healthy change from $25,000 in 2014.
The Section 179 deduction lets businesses deduct the full purchase amount of qualifying software and equipment in the given year. No more depreciating equipment and software. With Section 179, you can deduct the full purchase price of software and equipment in the year you purchased it.
New or used equipment qualifies for the Section 179 deduction. Equipment that is used but “new to you” qualifies for the deduction including:
- Computer Software (The EDGE® and its modules all qualify!)
- Office Furniture and Equipment
- Equipment (machines, etc.) purchased for business use
- Tangible personal property used for business
- Business vehicles with a gross vehicle weight over 6,000 lbs. (Section 179 Vehicle Deductions)
- Property attached to your building that is not a structural component of the building (e.g., a printing press, large manufacturing tools or equipment)
- Partial business-use equipment (that is, equipment purchased for business and personal use)
Use this Section 179 calculator to get an idea of what your savings from the deductions could be.
For more about Section 179 deductions, go to Section179.org.