Section 179 Tax Deductions
Section 179 of the IRS tax code allows businesses to deduct the full cost of qualifying equipment in the year it is put into use, rather than depreciating the value over time. This deduction can significantly lower a business’s taxable income for the year, helping businesses invest in new equipment while reducing their tax liability.
For example, if you purchase a piece of machinery and start using it immediately, you may be able to deduct the entire equipment price from your taxable income when filing your taxes, even though the equipment will provide value in the future.
Maximizing Tax Benefits for Your Business
The Section 179 deduction gives businesses an opportunity to reduce taxes while acquiring income-generating assets. Businesses can improve the return on their investments with the combination of deductions and predictable monthly payments.
By educating your customers about these potential tax savings along with financing options, you’re not only helping them grow their business through equipment acquisition but providing advisory value.
Key Section 179 Deduction Details
– Businesses can deduct up to $1,220,000 for new and used equipment placed into service.
– The deduction begins to phase out once total equipment purchases exceed $3,050,000 and is fully phased out at $4,270,000.
– Section 179 deductions are elected asset by asset, giving businesses flexibility in applying the deduction.
– Eligible equipment includes most new and used machinery, as well as some software.
– Section 179 is generally applied before Bonus Depreciation.
– Under the Tax Cuts and Jobs Act, businesses can fully deduct equipment costs using Bonus Depreciation through 2022. After 2022, this benefit decreases by 20% each year, so it’s important to act soon to maximize savings.
* Amur Equipment Finance is not an accounting firm. Please make sure to consult your personal tax advisor on any tax information. Credit & equipment restrictions apply. This program estimates a tax rate. Your actual tax rate and savings may vary. Tax benefits may vary by type and class of property purchased, use of property, the time when the property was acquired, and individual taxing situations. Your individual tax situation may affect your ability to utilize the elections. Please consult your tax adviser or accountant for additional information. Equipment for a 2024 deduction must be purchased and placed in service by 12/31/24.