Purchasing now, you can save on taxes
It’s not even Thanksgiving, but taxes are creeping up on all small businesses.
If you have been on the fence about adding to your fleet or arsenal,
the IRS Section 179 deduction is something construction, and
landscaping companies should begin considering right now.
What is IRS Section 179 Tax Deduction?
Section 179 of the U.S. Internal Revenue Code is an immediate expense deduction that business owners
can take for purchases of depreciable business equipment instead of capitalizing and depreciating the
asset over some time. The Section 179 deduction can be taken if the piece of equipment is purchased or
financed, and the full amount of the purchase price is eligible for the deduction. Taking the equipment cost
as an immediate expense deduction allows the business to get an immediate break on their tax burden
whereas capitalizing then depreciating the asset allows for smaller deductions to be taken over a longer
period. The Section 179 expense method is offered as an incentive for small business owners to grow
their businesses by purchasing new equipment.
So, How Much Can Be Saved?
In 2024 (taxes filed in 2025), the maximum deduction under Section 179 is limited to $1,220,000. A
business can combine multiple expenses to reach that total, but there is an overall limit on how much
eligible equipment you can buy and still receive a deduction. The maximum deductible amount begins to
decrease if more than $3,050,000 worth of property is placed in service. The 2024 Section 179 deduction
limit for SUVs is $30,500.
What Equipment Qualifies for Deduction?
To qualify for the Section 179 tax deduction, eligible equipment must be purchased, financed, and put into
service by midnight on December 31 of the year you’re filing for
Eligible property includes tangible personal property or other tangible property used at least 50% for
business. For heavy equipment owners, both new and used heavy equipment will qualify for the tax
deduction but always talk with your tax professional to be sure.
However, because many people earn business income through activities, such as freelance work or
consulting, Section 179 is relevant to many households. There are many ways of setting up a business,
all of which can affect taxes, but in general, the following types of purchases could be eligible for a
Section 197 deduction.
– Computer software that is not custom-made or modified specifically for your company.
– Construction, Landscaping, and Contract machinery and equipment.
– Livestock
– Some vehicles.
Other products may also be eligible for Section 179 deduction, depending on the nature of your business
and how you use the equipment. However, some categories of expenses should be considered carefully
before you claim a Section 179 deduction
In 2024, bonus depreciation will be reduced to 60% (previously this was 80%). So, if you buy a piece of
equipment for $100,000, you can take a $60,000 bonus depreciation deduction in the first year, with the
The remaining $40,000 is depreciated over the asset’s useful life (in this example, seven years).
Bonus depreciation is usually taken after you have reached the spending cap for Section 179. So, if your
equipment purchases exceed the Section 179 cap for 2024 of $2,940,000, you can still claim a bonus
depreciation on the excess amount.
Caution!
This summary is only meant to be for discussion and guidelines in your planning and thinking. ALWAYS
consult a qualified financial advisor for exact specifics and exclusions. That being said, this might be the
perfect time to improve your company and save money doing it.
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More information on all the Sound Heavy Machinery products and services can be found on www.SoundHM.com or by calling (910) 782-2477.
