IRS Section 179

NEWS ALERT:  SECTION 179 Deduction limit is $1,080,000 FOR 2022

What is the Section 179 Deduction

Most people think the Section 179 deduction is some mysterious or complicated tax code. It really isn’t, as you will see below.

Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.

Jan 4, 2022 – The Section 179 deduction for 2022 is $1,080,000 (up from $1,050,000 in 2021). This means U.S. companies can deduct the full price of qualified equipment purchases, up to $1,080,000, with a “total equipment purchase” limit of $2.7 million (up from $2.62 million in 2021). The deduction includes both new and used qualified equipment.

In addition, businesses can take advantage of 100% bonus depreciation on both new and used equipment for the entirety of 2022. Remember to keep supply chain issues and delivery times in mind when making your Section 179 purchases for 2022.

News Alert: Section 179 and COVID-19

Much of the equipment businesses purchased to conform to COVID-19 restrictions will qualify for the Section 179 tax Deduction. Details on the new Section 179 and COVID-19 page.

Further, eligibility for the Section 179 tax deduction for 2020 is unaffected by any pandemic-related financial assistance a business may have received (e.g., PPP Loans.) In other words, if a company received a PPP loan or any other Pandemic-related assistance, they may still claim their Section 179 Deduction.

News Alert: See the IRS Fact Sheet issued for Section 179

IRS Fact sheet FS-2018-9 provides current info on Section 179 deductions, including the addition of
certain building improvements, the 100 percent bonus depreciation, changes to depreciation limitations
on vehicles used for business, new treatment of farm equipment, and the recovery period for real
property. Despite the 2018 date, the information is still current for 2022.  Click here for the Fact Sheet


Common Questions:

How Much Can I Save on My Taxes in 2022?
It depends on the amount of qualifying equipment and software that you purchase and put into use. See the handy calculator below.

What Sort of Equipment Qualifies in 2022?
Most tangible business equipment qualifies.

When Do I Have to purchase the equipment?
Section 179 for 2022 expires midnight, 12/31/2022. If you wish to deduct the full price of your equipment from your 2022 taxes and take advantage of the new higher deduction limits, it must be purchased and put into service by then.

Many businesses are finding Section 179 Qualified Financing to be an attractive option in 2020.

Tax Savings Calculator

Equipment Cost:

Sec 179 Deduction:

100% Bonus Depreciation:

Normal First Year Depreciation:

Total First Year Deduction:

Cash Savings:
(Assuming 35% tax rate)

Lowered Cost of Equipment
After Tax Savings:

Qualified Property

Non Qualifying

  • Real Property
    Real Property does not qualify for the Section 179 Deduction. Real Property is typically defined as land, buildings, permanent structures and the components of the permanent structures (including improvements). Other examples of property that would not qualify for the Section 179 Deduction include paved parking areas and fences.
  • HVAC
    Air conditioning and heating equipment is generally not eligible for the Section 179 Deduction.
  • Used Outside the US
    Property used outside the United States generally does not qualify for the Section 179 Deduction.
  • Acquired by Gift
    Property acquired by gift or inheritance, as well as property purchased from related parties does not qualify for the Section 179 Deduction (No, you can't sell equipment to yourself and qualify for Section 179).
  • Personal Property
    Any property that is not considered to be personal property, may not qualify for the Section 179 Deduction.
  • Used Equipment
    Used Equipment (that is new to you) qualifies for Section 179, however used equipment does not qualify for Bonus Depreciation.