Accountant applying business loan Section 179 tax deduction on tax return forms

Everything You Need to Know About Business Loan Section 179 Deduction

The business loan Section 179 deduction allows businesses to deduct the full purchase price of qualifying assets financed during the tax year. The deductions from your gross income helps maximize the value of business equipment purchases and similar investments by lowering your overall tax cost basis. With a tax deduction available through Section 179, small businesses can more easily pursue financing to support their growth strategies without having to worry about high tax costs at the end of the year.

Taking Advantage of the Business Loan Section 179 Deduction

When the Section 179 deduction was initially introduced, it was viewed as an easy way for small business owners to obtain vehicles. At the time, the tax code focused on empowering businesses to purchase qualified vehicles through reimbursement. Recently, the tax code has been updated to cover a wider range of equipment types and purchases, moving from a specialty option to a mainstream deduction that just about any company can take advantage of. The business loan Section 179 deduction is an ideal option if you’re looking for equipment financing or similar funding.

The deduction benefits small businesses, as it creates significant business tax debt relief and is accessible to millions of organizations. The major change with Section 179 is the ability to write off the entire cost of qualifying items. Historically, you had to break out what you deducted across multiple years, which made it less financially rewarding and more complex to manage. With the new code in 2018, you can use the business loan Section 179 deduction for the full cost of all purchased assets, simplifying the process.

The business loan Section 179 deduction is an ideal option if you’re looking to obtain a small business loan to cover cash related expenses and buy equipment. For example, the Section 179 deduction can be leveraged if you take out a working capital loan and allocate some of the funds from the loan to buy hard assets such as machinery. A working capital loan gives you the flexibility to buy equipment and pay for non-tangible expenses.

Section 179 tax deduction documents on top of a calculator and spreadsheet

Rules and Limitations of the Section 179 Deduction

According to an update from the U.S. Internal Revenue Service on the Section 179 deduction, the tax code comes with new rules and limitations that you need to be aware of. Here are a few of the limitations when leveraging a business loan Section 179 deduction:

• You can claim up to $1 million in relevant materials, compared to $500,000 in the past.
• The phase-out threshold has risen to $2.5 million from $2 million.
• Beyond equipment, the IRS is expanding what’s covered under the deduction.

Besides these limitations, the Section 179 deduction comes with a few specific rules pertaining to what you can claim. For example, you can’t have used property prior to acquiring it. It also can’t be obtained from a related party. These rules have to do with the 100 percent expensing bonus for the business loan Section 179 deduction.

It’s important to speak with a tax professional when considering a business loan Section 179 deduction. Specific tax laws go through many changes and a specialist will help to ensure you fully understand what your options are.

Working with a Lender That Has Tax Deductions in Mind

Seeking financing can be intimidating. It may seem risky because you need to grow enough to pay back the loan. At QuickBridge, we make funding smarter. We offer fast short-term financing, including business tax debt loans that are suited to your specific needs. Our loan specialists provide easy access to the funding you need for equipment, internal property upgrades, or similar expenses that would qualify for the business loan Section 179 deduction.

We don’t just simplify the lending process. Our company utilizes advanced analytics to speed up the process of analyzing loan applications. This means we can take the time to get to know your business and make sure the financing we offer you aligns with your growth efforts. From there, the Section 179 deduction lets you reduce the tax burden of your growth and get value from your investments. Contact us to get started today.

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