Section 179 is not new, but there are some significant changes in the tax code for 2018, which benefit our clients. At Oakmont Capital Services, we want to ensure our clients are aware of the potential tax deductions and cash flow benefits, overall financial advantages and possible business growth that this tax code can endow.

Section 179 Defined

To begin, let’s make sure we are all on the same page when it comes to Section 179, which is part of the IRS tax code that was created to encourage small businesses to invest in growth by providing accelerated depreciation and tax deductions on qualifying business purchases. The main benefit of Section 179 is that you get to deduct the cost of the eligible property immediately. By contrast, most of business property requires depreciation over the course of its useful life. Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year…and only includes commercial equipment purchases!


Why is this great news for our clients?

Due to some favorable changes for businesses in 2018 regarding Section 179, it’s time to start thinking about equipment inventory and potential purchases before the end of the year. If you decide to buy (or lease) a piece of qualifying equipment, you may deduct the full purchase price from your gross income, allowing for more immediate tax savings.

Let’s examine the big changes for 2018 at a glance:

  • 2018 Deduction Limit = $1,000,000 (one million dollars)
  • 2018 Spending Cap on Equipment Purchases = $2,500,000
  • Bonus Depreciation is 100%

Commercial equipment purchases up to $1 million qualify for the Section 179 deduction and any amount above $1 million up to the spending cap of $2.5 million qualifies for bonus depreciation, which is why business owners should start thinking now about buying equipment before the end of the year. Why is timing so critical? Not only will purchases within the 2018 calendar year benefit taxes, but equipment costs and interest rates are likely to rise in 2019. It makes sense to buy now, save now, and prepare now for the future.

Let’s Do the Math

It makes financial sense to purchase equipment before the end of the year, save on taxes, and grow your business:

Section 179 for Business Taxes 2019 2018

Bonus: Cash Flow Benefits

Question, and it’s not a trick one: do you want more cash or less to run your business? By financing equipment for your business, Section 179 enables you to increase your cash flow. Here’s the breakdown: let’s say you purchase a $100,000 piece of equipment without financing. Under the Section 179 deduction, it will reduce your tax bill by $35,000 but also reduce cash flow by $65,000. By financing that same piece of equipment instead of paying cash, you can add the tax savings ($35,000) to your cash flow ($100,000) while also acquiring the equipment that can help grow your business for the long term. It’s a win-win!


What to Do Next to Capitalize on Section 179 for 2018?

If you’re thinking about buying some new commercial equipment before the end of the year but need a line of credit quickly to move forward with the purchase, call us today. Oakmont Capital Services is adept at approving financing requests of up to $300,000 within 24 hours for all types of businesses. Our goal is to work with clients to find the best financing options suitable for growing businesses… especially those who want to benefit from Section 179! Contact an OCS finance professional today at info@oakmontcapitalservices.com or 877-701-2391.

Oakmont Capital Services (Headquarters)
600 Willowbrook Lane, Suite 601
West Chester, PA 19382
Direct  (610) 892 8670
Toll-Free  (877) 701 2391
Fax  (800) 843 2948

CFLL #60DBO 91777

Oakmont Capital Services (Minnesota Offices)
1321 Shamrock Ln, Suite 1
Albany, MN 56307
Direct  (320) 844 8800
Toll-Free  (877) 701 2391
Fax  (800) 843 2948

CFLL #60DBO 93550

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