Section 179 Deduction: A Guide and Calculator for 2021

Section 179 deduction is simple to use. All you need to do is buy (or finance) the equipment, and use IRS Form 4562.
Stan Ragley Finance Consultant

How to Utilize Section 179 Deduction for Your Business


1. Make sure your asset qualifies for deduction

A. It Needs to be a Tangible Asset

• Your asset needs to be tangible; it cannot be items such as patents or copyrights but needs to be physical assets such as furniture, equipment, and even computer software.

B. Personal use

• The asset you are wanting to qualify needs to be primarily used in your business. An item that is primarly used for personal use but occasionally used or the business will not qualify.

C. Leasing

• Your purchase is not eligible for the section 179 deduction if you are leasing, you will need to purchase or finance the equipment for it to qualify.

D. Relation to the asset

• The asset will not qualify if you are purchasing it from a party you have a relationship with such as siblings, parents, business, charitable organizations and trusts.

2. The asset needs to be in use

• Section 179 deduction only allows equipment that is in use to qualify, so you will need to use the asset within the same year to receive the deduction.

3. Submit the IRS Form 4562

• Claiming the section 179 deduction is easy. All you need to do is submit form 4562. This will entail the description of the property, its cost, and the amount you are wanting to claim for the asset.


Section 179 Deduction Calculator

To help you see how much money you can save, use the Section 179 deduction calculator below. This will give you an accurate picture of just how much savings can be generated when utilizing the Section 179 deduction.

Section 179 Deduction Calculator

Section 179 Deduction: Tax Cuts and Job Act

Section 179 is the area of the IRS tax code created to help businesses reduce their tax liability. Under Section 179 limits established by The Tax Cuts and Jobs Act allows, businesses that purchase qualifying equipment may immediately depreciate up to $1,000,000 of their new or used equipment costs.

In addition, businesses acquiring qualifying equipment may utilize an additional 100% BONUS depreciation allowance.

Additional Depreciation

Additional depreciation for both new and used qualifying equipment is allowed with the use of the standard first year depreciation allowance (under MACRS rules, 20% for equipment with a 5 year class life as defined in IRC Section 168)
Section 179 is an excellent incentive for businesses to purchase, finance, or lease equipment this year.


Please Note:

To take advantage of the tax incentives, your business equipment or software must be put in use by year-end. The Limit on Capital purchases is $2,500,000.

Section 179 is simple to use. All you need to do is buy (or finance) the equipment, and use IRS Form 4562.


For more information, contact Stan Ragley at 704-641-2587 or by email at stan.ragley@biesseamerica.com



If you are interested in or have any questions about financing a CNC Machine, check out our Guide to Financing a CNC Machine in 2021
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