2020 Year End Tax Incentives
Your Small Business May Qualify for a 2020 Tax Deduction of up to $1,000,000
All Your Hard Work Is about to Pay Off
For over 40 years, Quirk Auto Dealers has helped small business owners get the job done. Now under new tax depreciation laws, we’re here to assist you further along in your journey. New terms state that small businesses may be eligible to immediately deduct up to 100% of the purchase price of an unlimited number of qualifying Chevy vehicles purchased in 2020 for business use. Not sure which vehicles qualify? Our commercial sales team can help you with that! But for now, let’s go over the new changes to Section 179.
Section 179 Deductions at a Glance
Some believe Section 179 Deductions is complicated. However, this is a common misconception. As you will read, this tax code is simple and easy to understand. In short, this IRS tax code allows businesses to deduct qualifying equipment and/or software purchased or financed during a given tax year. In terms of commercial and fleet vehicles, small business owners can deduct the full purchase price from their gross income. The reasoning and motivation behind this is to encourage growth through investments. In recent years, people have found loopholes and abused Section 179 Deductions. This was later dubbed the “SUV Tax Loophole”. Because of this, our government has placed limits and restrictions on qualifying vehicles. Be sure to check the list above to confirm the eligibility of your desired commercial vehicle.
How Does It Work?
In years past, when your business bought qualifying equipment, it typically wrote it off a little at a time through depreciation. In other words, if your company spends $50,000 on a machine, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example).
Now, while it’s true that this is better than no write-off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it. And that’s exactly what Section 179 does – it allows your business to write off the entire purchase price of qualifying equipment for the current tax year. This has made a big difference for many companies (and the economy in general.) Businesses have used Section 179 to purchase needed equipment right now, instead of waiting. For most small businesses, the entire cost of qualifying equipment can be written-off on the 2020 tax return (up to $1,000,000).
Limits of Section 179
Section 179 does come with limits – there are caps to the total amount written off ($1,000,000 for 2020), and limits to the total amount of the equipment purchased ($2,500,000 in 2020). The deduction begins to phase out on a dollar-for-dollar basis after $2,500,000 is spent by a given business (thus, the entire deduction goes away once $3,500,000 in purchases is reached), so this makes it a true small and medium-sized business deduction.
So What’s The Catch?
The qualifying vehicle must be purchased and placed into service by midnight December 31, 2020. It must be used at least 50% for business, based on mileage, in the first year it is placed in service. So if you choose to use it for both personal and business use, the cost eligible for deduction would be the percentage used for business. Please note that the maximum IRS Section 179 Deduction of $1,000,000 allowable is reduced if the Company purchases and/or finances more than $2,500,000 in business equipment during the tax year 2020.
For a complete understand of Section 179 Deductions, please consult your tax professional.
Up to $18,000*
- Bolt EV
- City Express
Up to 100%**
- Silverado 1500
- Silverado 2500HD
- Silverado 3500HD
- Silverado Chassis Cab
- Express Cargo Van
- Express Cargo Van
- Express Cutaway
- Low Cab Forward
*No aggregate limitation
**No per-vehicle or aggregate limitation