What is Section 179?
Section 179 is a U.S. tax provision that allows businesses to deduct the cost of new and used equipment in the year it is purchased, enabling them to write off the amount on their taxes.
Deduction Limits
The Section 179 deduction for 2024 is $1,220,000, which is an increase of $60,000 from 2023’s limit. This means U.S. companies can deduct the full purchase price of ALL qualified equipment purchases, up to the limit of $1,220,000. In addition, the “total equipment purchase” limit has been raised to $3,050,000 (up from $2.89 million in 2023). The deduction can include both new and used equipment acquired and put into service between 1/1/2024 and 12/31/2024.
WHAT QUALIFIES
- New & Used Equipment
- Purchased, Financed, or Leased & Put into Service by 12/31/2024
Equipment • Machines • Business Vehicles • Office Equipment • Computers • Software
BONUS DEPRECIATION
Businesses can also take advantage of a *60% bonus depreciation for the entirety of 2024.
It falls to 40% in 2025 and 20% in 2026.
In 2027, the program will cease to exist.
2024 Section 179 Example #1
- Always Speak to a Trusted Tax Advisor -Example below assumes tax bracket of 35%
- Section 179 Deduction:
$75,000 - Cash Savings on your Purchase:
$26,250 - Lowered Cost of Equipment (after Tax Savings):
$48,750
2024 Section 179 Example #2
- Always Speak to a Trusted Tax Advisor -Example below assumes tax bracket of 35%
- Section 179 Deduction:
$150,000 - Cash Savings on your Purchase:
$52,500 - Lowered Cost of Equipment (after Tax Savings):
$97,500
2024 Section 179 Example #3
- Always Speak to a Trusted Tax Advisor -Example below assumes tax bracket of 35%
- Section 179 Deduction:
$500,000 - Cash Savings on your Purchase:
$175,000 - Lowered Cost of Equipment (after Tax Savings):
$325,000