GET YOUR TAX SAVINGS NOW & BUY A VEHICLE FOR YOUR BUSINESS

 

What is Section 179?

Businesses can deduct the full purchase price of qualifying equipment purchased during the tax year. This means that work trucks and vans that your customers buy (or lease) are likely eligible for this incentive. The maximum deduction for 2020 is up to $1,040,000 and buyers will need to elect it; the deduction will not be applied automatically.

Are there restrictions?

Both new and pre-owned vehicles are eligible; however, it's important to note that vehicles purchased must be in service before December 31, 2020 to qualify. In addition, vehicles purchased need to be used primarily for business purposes. If personal use is greater than 50%, it will not qualify for the Section 179 deduction.

We encouraged you to consult with your accountant or tax adviser to discuss their financial strategy.

This is a great incentive for small and medium-sized businesses to add new work vehicles that improve reliability and/or improve efficiency.

• IRS Section 179 is a tax code that allows many small businesses to write-off up to $500,000 on their IRS tax returns when investing in new equipment. Previously, companies might have dispersed these deductions out over several years. IRS Section 179 changes this and now allows many small businesses to write-off up to the entire purchase cost of qualifying new Ford trucks or vans. Continue reading if you would like to deduct up to $500,000 in new automobiles in the first year they're placed in service.

What Is IRS Section 179?

Section 179 is the current IRS tax code that allows you to buy qualifying Ford vehicles and deduct up to the full purchase price (including any amount financed) from your gross taxable income if purchased before December 31, 2020. If you purchase a qualifying vehicle, you may be able to write-off the full purchase price from your gross taxable income.

Which Vehicles Qualify For The Greatest IRS Savings?

The vehicles which qualify for the greatest tax savings are trucks with a GVWR greater than 6,000 pounds and a bed length of at least six feet (i.e., Ford F-150/F-250/F-350). These new Ford vehicles qualify for the maximum first-year depreciation deduction of up to the full purchase price. SUVs, including trucks, with a bed length of fewer than six feet and a GVWR greater than 6,000 lbs. (i.e., Ford F-150 SuperCrew 5½ ft. bed, Explorer, Expedition) qualify for a maximum first-year depreciation deduction of up to the first $25,000 of the full purchase price plus 60% depreciation of any remaining balance.

How Do I Receive This?

The qualifying vehicle must be purchased and placed into service between January 1, 2020, and December 31, 2020, for it to qualify for the Section 179 deduction. The vehicle must be used at least 50% for business, based on mileage, in the first year it is placed in service. If your truck is used for both personal and business use, the cost eligible for the deduction would be the percentage used for business. Based on this tax code, all businesses that purchase or finance less than $2 million in business equipment during the 2020 tax year should qualify for the Section 179 deduction.