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Section 179 Deductions for End of the Year Heavy Truck Financing And Leasing

With the end of the year quickly approaching, fleet owners across the country are looking for ways to decrease their tax liability and increase their potential for profits in the new year. Heavy and medium duty truck financing and leasing may not seem like the best way to do this, however, it does have some advantages, namely the Section 179 Deduction. This commonly misunderstood tax benefit can help trucking companies of all sizes when they make a qualified purchase.

What is Section 179?

In basic terms, Section 179 of the IRS tax code is part of a Stimulus Bill intended to provide tax relief for small business. However, larger companies can, and do, take advantage of it as well. Simply put, it allows for a deduction of the full purchase price of qualifying equipment that bought outright, or financed in the current year. Both new and used equipment qualifies for the deduction. In addition, those purchasing new equipment may be eligible to take a bonus depreciation deduction of up to 50 percent on their purchases immediately.

What Can Be Deducted?

Any purchase of equipment that is used 50 percent, or more, of the time for business purposes, such as heavy and medium duty trucks, can be written off. The vehicle must be put into service prior to December 31, 2016, according to the terms of Section 179. While this is certainly an incentive for fleets to add vehicles, trucks are not the only thing that can be deducted. Other items also qualify, such as new computer systems, off-the-shelf software and office furniture. In essence, any tangible item purchased in the current calendar year can be deducted.

Deduction Limits

While Section 179 is designed to encourage new equipment purchases, it is not without limits. Namely, ,there is a $500,000 cap on the amount a company can write off for their qualifying equipment purchases. Therefore, a company that makes a purchase of $1 million in equipment would only be able to deduct half of the cost on their taxes for the year. There is also a cap on purchases of $2 million, after which, the deduction is reduced dollar-for-dollar. The intent of these limits is to retain the benefits for small businesses, rather than benefiting the largest corporations.

If you're a fleet owner that maintains a small number of trucks and trailers or owner operator, now is the time to invest in new equipment to fill out your fleet. Contact us to learn more about qualifying vehicles as well as the benefits of Section 179. Our expert staff will be more than happy to assist you and talk to you about Carolina Idealease. But, remember, these benefits are only available until December 31. After that, the rules may well change.


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