Whether you are replacing equipment or growing your fleet, Section 179 is an incredible opportunity to save on taxes and invest in your business.
The Section 179 incentive allows you to deduct the cost of qualifying equipment in the same year that it is purchased, making it an attractive option for anyone in construction, landscaping, agriculture, and more. Let’s take a closer look at the key benefits of Section 179 and why it may be worth considering as part of your end-of-year buying strategy.
What is Section 179?
Section 179 of the IRS tax code is designed to help businesses invest in themselves by allowing the immediate deduction of the purchase price of qualifying equipment, rather than depreciating the expense over several years. For 2024, businesses can deduct up to $1,160,000 on eligible new or used equipment, subject to a phase-out threshold of $2,890,000.
The Benefits of Section 179
Here are some of the potential benefits of Section 179, however, always consult with your tax advisor to understand if this could be beneficial for you.
1. Immediate Tax Savings
One of the main advantages of Section 179 is the potential for significant tax savings. By deducting the full purchase price of equipment immediately, you can reduce your taxable income for the year. This benefit is especially valuable for companies looking to reinvest in their operations without a long wait for returns.
2. Improve Cash Flow
In addition to tax savings, Section 179 can greatly improve cash flow. With the ability to deduct the equipment cost all at once, you retain more cash on hand, which can be put toward other critical needs like staffing, materials, or additional investments. This increased liquidity is especially beneficial for small and mid-sized businesses that are focused on growth.
3. Upgrade Your Equipment
Section 179 provides a perfect reason to upgrade to the latest, most efficient equipment. Whether you need new excavators, skid steers, or compact tractors, investing in updated machinery can help improve productivity and reduce maintenance costs associated with older equipment.
4. Leverage Financing Options
Financing your equipment purchase can maximize the impact of Section 179. With financing, you’re able to deduct the full cost of the equipment even if you haven’t fully paid for it by year-end. By combining Section 179 with our low-interest financing or leasing options, you’re able to achieve a strong return on investment with minimal upfront expense.
5. Take Advantage of Bonus Depreciation
In addition to Section 179, you may also qualify for bonus depreciation, which allows for the deduction of an additional percentage of qualifying property costs. Currently set at 80% in 2024, this added benefit can further reduce your tax burden, making it possible to invest in higher-value or multiple pieces of equipment at once.
What Types of Purchases Qualify for Section 179?
Almost any business equipment you buy, or lease, may qualify for Section 179. This includes, but is not limited to:
- Heavy equipment, such excavators, dozers, tractors, and loaders
- Vehicles and trucks used for business purposes
- Office furniture and technology
- Manufacturing machinery and more
For a more comprehensive list and specifics on qualifying items, check with your tax advisor.
How to Claim Section 179
Claiming Section 179 is straightforward. When filing taxes, simply complete Form 4562 and consult your tax advisor to make sure you’re maximizing your benefits. The deadline for Section 179 deductions is December 31, so any equipment purchased by the end of the year may qualify for immediate deduction on this year’s tax return.
Don’t Miss the Deadline
To qualify for Section 179 for the current tax year, equipment must be purchased, financed, or leased and put into service by December 31. Be sure to act fast to take advantage of this benefit and maximize your year-end savings.
Ready to Invest?
If you’re considering upgrading your fleet, now is the perfect time. Take advantage of Section 179 and keep more of your hard-earned money while equipping your business for success. Contact your nearest Bacon Universal* branch today to discuss options and find the right machinery for your needs.
*Bacon Universal does not provide tax advice. Please consult with your tax advisor.
