Contractors will once again be able to write off the entire purchase price of new and used construction equipment bought and put in service in 2020.
The tax break is available through Section 179, which allows companies to write off the entire purchase price of qualifying equipment – not just construction equipment. The limit for the Section 179 deduction for 2020 is $1,040,000. This means a company can purchase that amount in equipment and deduct the entire cost from taxable income.
The deduction is good until the “total equipment purchased for the year” exceeds $2,590,000. Once a business’ equipment purchases exceed that number, the deduction reduces on a dollar-for-dollar basis (most small and medium businesses will never hit that number, making Section 179 a true small- and medium-business tax break).
Let’s answer a few common questions regarding Section 179 (note: you can visit section179.org for more detailed information).
Almost all tangible business equipment qualifies: production machines and related equipment; office machines and furniture; computers and common software; safety equipment; most signage; business vehicles in excess of 6,000 pounds gross vehicle weight (including heavy equipment); and more.
Note: If you needed to buy equipment to modify your workspace for COVID-19, such as plexiglass dividers, air filtration systems, sanitizing stations, new servers for work-at-home people, etc., it’s very likely they are Section 179 eligible, which is great news. As always, ask your accountant for the final word.
