What does Section 179 mean to you? If you’re not sure, stop everything immediately and prepare for more money in your pocket come tax season. According to current U.S. tax code, fleet companies are entitled to a tax deduction of some very high proportions. We’re betting that your business property can meet the requirements.
The tax code specifically allows businesses to deduct the full purchase price of certain qualifying items, such as your fleet. While there are caps on the total amount that can be written off, businesses that exceed the threshold amount may be able to qualify for a 50% bonus depreciation for the overflow.
The ability to write off an entire equipment purchase at once rather than at a depreciated rate is an amazing thing. Under depreciation, your company can only write off a specific percentage of the entire purchase yearly (for example, $8,000 annually for five years off a $40,000 vehicle purchase.)
It’s beginning to makes sense why tax code came into existence. The objective of Section 179, therefore, is to stop gradual depreciation from taking place. Companies now have the ability to write off their entire purchase at the same time rather than at a slow, protracted rate. The reasoning behind this is if companies were able to receive more tax savings per year, they could for example, buy more equipment annually. All of this would help stimulate the economy and consequently help businesses see more profit.
All companies that spend less than $560,000 in business equipment are eligible for the Section 179 deduction; however, fleet companies that spend slightly under may see a benefit come tax season as well.
If Section 179 is pulled back by Congress, equipment purchases will revert back to standard depreciation schedules, according to Stephen Clark, a business development manager at Teletrac. As he notes, “Take advantage of tax breaks on equipment purchases before [the government] takes them away.” He mentions that Congress may decide to limit the purchases that the tax incentive program applies