Legal Disclaimer: This article is written for informational purposes only and does not constitute professional financial advice. Please reference section179.org and a professional accountant for advice on financial planning and filing taxes.
As 2020 comes to an end, you might be thinking about all of this year's expenses and wondering what you might be able to write off on your taxes. You may even be considering whether or not to make a big purchase, weighing the tax deductions you could get if you bought it this year versus next.
Is it worth buying that new lift before the year ends? Or should you put it off until 2021?
What is Section 179?
Section 179 of the IRS tax code allows business owners to write off the entire cost of a piece of equipment, renovations, or other assets in the first year instead of writing off an asset a little bit at a time over a five, seven, fifteen, or thirty-nine year period. To give an example, if a shop owner buys a new tire machine, they could either write off the taxes over a seven-year period, or they can use Section 179 to get the entire deduction in the first year.
What Type of Costs Qualify for Section 179?
Tangible business property, including machinery and equipment
Leasehold improvements
Computer software*
*Is Tekmetric Eligible for Section 179?
Generally speaking, off-the-shelf computer software that has been purchased outright is eligible for Section 179. Because Tekmetric is a web-based software and does not make users sign a contract, it is not eligible for section 179, but it does qualify for a standard tax deduction.
What are Leasehold Improvements?
Leasehold improvements are any repairs or modifications that you make to your building or property, including adding a new roof, installing security or safety systems, and remodeling parts of your building without expanding the footprint. Without Section 179, leasehold improvements depreciate over 15 or 39 years, depending on what the improvements are. With Section 179, you can receive the entire deduction in the first year.
How Often Does Section 179 Change?
Section 179 is typically adjusted every several years. Most recently, Section 179 was adjusted in 2018 when the deduction limit was doubled and more types of purchases were made eligible. Section 179 may change again in the following years.
When Should You Use Section 179?
If you know that you’re going to pay taxes this year, and you have made a major qualifying purchase, then you may want to consider using Section 179 to save on your taxes and free up some cash flow for 2021.
If you financed a major purchase, you may want to consider how soon you plan on paying off that purchase and whether or not you would like to receive a tax deduction in the following years as you pay it off. For example, if you have a loan on a piece of equipment that you plan on paying over five or ten years, you may want to opt for the regular depreciated tax reduction so that you have money to offset those taxes in the following years.
Should You Make a Major Purchase Before the Year Ends to Use Section 179?
It’s not the wisest decision to buy something just to save money. It is true that Section 179, and tax benefits in general, are the best that they’ve been in years, but consider only making a major purchase if it is already in your plan and budget. If it is something that you already planned on buying in the next six months, then you may want to make the purchase before the end of the year to leverage Section 179’s tax deductions.
Talk to the Auto Repair Accounting Experts
Every situation is different. Take a look at what your tax rates are and ask yourself, "Is my income low enough this year where I'm actually reducing taxes at a pretty low rate? What do I think the tax rates are going to be in the future? Or will this benefit me more in the coming years when I think I'll be making more money?"
Talk to your accountant to form a game plan for all of this.
This article was written with the guidance of automotive repair industry CPA Hunt Demarest of Paar, Melis, & Associates, P.C.
Need help planning your taxes for 2020? Contact Paar, Melis, & Associates.
We’re proud to share that the Tekmetric Mobile App has been named a winner of the 2025 MOTOR Top 20 Award, an honor that recognizes the 20 most innovative and impactful tools and technologies shaping the automotive industry.
For decades, the MOTOR Top 20 Awards have been a benchmark for excellence, celebrating advancements that help technicians work more efficiently and shop owners operate more profitably. To be included on this list is a powerful acknowledgment of our team’s commitment to solving real challenges for repair shops
The Tekmetric Mobile App was designed to make shop management easier and more effective. By streamlining workflows, enhancing communication, and providing shop owners with the real-time insights, the app equips teams to deliver a better customer experience while running a more profitable business..
Tek-Tip: Learn more about the Tekmetric Mobile App. Now available in the Apple and Google App stores.
This recognition wouldn’t be possible without the thousands of shop owners, service advisors, and technicians who share their feedback with us every day. Your trust pushes us to keep improving, and this award reflects both your partnership and our team’s dedication to moving the industry forward.
As we look ahead, we are more motivated than ever to build solutions that give repair shops the horsepower to grow, the efficiency to scale, and the tools to deliver service with confidence.
To learn more about the MOTOR Awards and view the 2025 Top 20 Awards, visit https://www.motor.com/2025/09/motor-announces-2025-top-20-awards-winners/
About Tekmetric
Tekmetric, the leading auto repair technology company, improves auto repair shops through the relentless pursuit of innovation. Tekmetric’s all-in-one cloud-based auto repair platform, including shop management, payments, marketing, technology integrations, and real-time data, empowers auto repair shops nationwide. With Tekmetric, shop owners can create transparency, enhance productivity, increase profitability, and deliver a superior customer experience for vehicle owners.
With so many different aspects of running an independent auto repair shop, the teams that keeps cars moving through your bays and repair orders flowing through your workflow function best when they run like a cohesive unit.
Just think about your favorite sports team. The players share a common goal, whether it be scoring a touchdown or hitting a home run, and they encourage each other to always perform at their best.
But there’s usually one person on the team who everyone looks to for guidance and inspiration: the team captain. Every player in the auto repair industry is important—from the technicians to the parts managers. But service writers are like the team captain. They keep everyone on track.
If you’re ready to learn about a challenging but rewarding career where no two days are the same, you’re in the right place.
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