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Section 179

Equipment purchased in 2024 may qualify for tax deduction

For businesses purchasing equipment, the Section 179 deduction is easy to apply. It gives businesses an incentive to invest in equipment and software to boost efficiency, raise productive capacity, expand products and services, and grow revenue.

Steam roller heavy equipment flattening asphalt

Section 179 Tax Deduction

Tax deduction limit is $1,220,000

  • Most tangible business equipment qualifies.
  • Equipment must be purchased and put into use between Jan. 1 and Dec. 31 of the tax year.
  • You can take full advantage of the deduction when financing equipment.
  • Submit IRS Form 4562 with your tax filing to claim the deduction.

Consult your tax advisor

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Example

Below is an example of how Section 179 and bonus depreciation could affect business tax deductions.

2024 Example*
Cost of equipment $2,000,000
Section 179 deduction $1,220,000
Bonus depreciation deduction $468,000
Total 1st year tax deduction $1,688,000
Tax bracket 35%
Potential tax savings $590,800
Equipment cost after potential tax savings $1,409,200

 

* This example presents a potential tax scenario based on assumptions that may not apply to your business. Stearns Bank does not offer tax advice. Please consult your tax advisor to determine the tax implications of acquiring equipment for your business. 

 

Section 179 FAQ

What are the Section 179 dollar limits?

The Section 179 annual deduction limit for 2024 is $1,220,000. The highest annual investment limit for qualifying equipment purchases is $4.27 million.

Does the purchase date of my equipment have an impact on my deduction?

Yes. The equipment must be purchased (financed/leased) and put into service between Jan. 1 and Dec. 31 of the current tax year to qualify for the deduction.

How do I know if the property I am purchasing or leasing qualifies for the Section 179 deduction?

Consult IRS guidelines or your tax advisor for a list of equipment that qualifies for Section 179.

How does bonus depreciation work under the new format?

Bonus depreciation has been adjusted to 60 percent through 2024. Bonus depreciation works in conjunction with the Section 179 deduction. You can take your deduction right off the top and then go back and take depreciation off what is left. So, bonus depreciation is taken after the deduction is used. This may be useful for large businesses spending more than the Section 179 spending limit for that year. The bonus depreciation amounts will decrease to 40 percent in 2025 and 20 percent in 2026.

How can I calculate my savings by using Section 179?

Section 179 calculators are available through various resources and websites, including GoodCalculators.com.

Can I buy or lease a vehicle and take the Section 179 deduction?

Generally, a vehicle must have a gross vehicle weight of more than 6,000 pounds. For instance, heavy construction equipment, large passenger vans and tractor trailers are the vehicles that qualify.

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Resources

The Basic Process To Apply For Equipment Financing

02/13/2024
Read More

How Small Business Owners Can Maximize Tax Savings With Section 179 Deduction

11/21/2023
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Does Your Lender Offer Custom Payment Solutions?

08/25/2023
Read More

Financing Terms Every Small Business Owner Should Know

05/22/2023
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Use our Section 179 calculator to estimate your tax deduction for equipment purchased in 2019. Consult your tax advisor.
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