Amount ($) *
Section 179 Deduction/1st Year Write Off
(maximum $1,000,000 this tax year)
Bonus 1st Year Depreciation Deduction
(currently 100% this tax year)
Normal 1st Year Depreciation
(currently 0% this tax year / in each of 5yrs on remaining amount)
Total First Year Deduction
(Section 179 Deduction + Bonus Depreciation Deduction + Normal 1st Year Depreciation)
Assumed Customer Tax Bracket
Cash Savings on your Purchase
(assuming a 35% tax bracket: Total First Year Deduction x 35%)
Lowered Cost of Equipment
(after Tax Savings)
Information dispensed on this site is for estimation purposes only and accuracy is not guaranteed. Matsuura Machinery USA, Inc. and its owners, affiliates, distributors, and partners are not tax advisors, and this tool is not intended to offer any tax advice. Please consult with qualified professionals concerning your specific situation.
2018 Deduction Limit = $1,000,000
This deduction is good on new and used equipment financed/purchased and put into service by 12/31/2018.
2018 Spending Cap on equipment purchases = $2,500,000
This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis.
Bonus Depreciation: 100% for 2018
Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached. Note: Bonus Depreciation is available for new equipment only.
What is the Section 179 Deduction?
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.
Limits of Section 179
Section 179 does come with limits - there are caps to the total amount written off ($1,000,000 for 2018), and limits to the total amount of the equipment purchased ($2,500,000 in 2018). The deduction begins to phase out dollar-for-dollar after $2,500,000 is spent by a given business, so this makes it a true small and medium-sized business deduction.
Who Qualifies for Section 179?
All businesses that purchase, finance, and/or lease less than $2,500,000 in new or used business equipment during tax year 2018 should qualify for the Section 179 Deduction.
The deduction begins to phase out if more than $2,500,000 of equipment is purchased - in fact, the deduction decreases on a dollar for dollar scale after that, making Section 179 a deduction specifically for small and medium-sized businesses. Bonus depreciation in 2018 is offered at 100%.
The most important difference is both new and used equipment qualify for the Section 179 Deduction (the used equipment is "new to you"), while Bonus Depreciation covers new equipment only.
Bonus Depreciation is useful to very large businesses spending more than the Section 179 Spending Cap (currently $2,500,000) on new capital equipment. Also, businesses with a net loss are still qualified to deduct some of the cost of new equipment and carry-forward the loss.
When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation - unless the business had no taxable profit, because the unprofitable business can carry the loss forward to future years.
Section 179's "More Than 50 Percent Business-Use" Requirement
The equipment must be used for business purposes more than 50% of the time to qualify for the Section 179 Deduction. Simply multiply the cost of the equipment by the percentage of business-use to arrive at the monetary amount eligible for Section 179.