The Section 179 Deduction is a valuable tax incentive, allowing businesses to keep more money while investing in the equipment they need to grow. This part of the IRS tax code enables companies to deduct the full purchase price of qualifying equipment, software, or vehicles bought or financed during the tax year.
What is Section 179?
Traditionally, businesses spread out the cost of equipment purchases over many years when filing their taxes. Section 179 allows businesses to immediately deduct the full cost of qualifying equipment, providing a quicker return on investment. This increases financial flexibility by reducing tax bills in the year of purchase.
2024 Section 179 Deduction Limits
For 2024, businesses can deduct up to $1,220,000 of qualifying purchases, an increase from 2023’s limit of $1,160,000. In addition, businesses can purchase up to $3,050,000 in total equipment and still take full advantage of the deduction.
Businesses can still benefit from bonus depreciation if the equipment purchase exceeds this amount. In 2024, bonus depreciation allows businesses to deduct an additional 60% of the cost of their equipment, providing further tax savings.
Qualifying Equipment
A wide range of equipment qualifies for the Section 179 deduction, including new and used machinery, business vehicles, and software. The key requirement is that the equipment be purchased and put into service between January 1, 2024, and December 31, 2024.
Why Use Section 179?
Section 179 makes it easier for businesses to invest in growth while improving their bottom line. By deducting the total equipment cost immediately, businesses can increase their financial flexibility and invest in the tools they need to operate more efficiently.
Section 179 allows businesses to reduce operating costs, lower their tax burden, and ultimately enhance their ability to grow and succeed.