Have You Purchased or Do You Plan on Purchasing Equipment for Your Business in 2024? Time is Running Out for You to Secure Your Section 179 Deduction
What is Section 179?
If you own a small business, the Section 179 deduction is one of the most important tax codes you need to be familiar with in 2024. If you buy (or lease) a piece of qualifying equipment, you can deduct the full purchase price from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves. Section 179 is good for the companies that use the deduction to buy needed equipment, it’s good for the equipment manufacturers who they buy from, and it’s good for the overall economy. The program lets you deduct all or part of the cost of equipment that is purchased or financed and put into place before December 31, 2024. That’s cash you keep instead of sending to the IRS. It’s a good idea to become familiar with this tax incentive so you can plan for your company’s future as it relates to capital equipment purchases. Preferred Capital can help with those equipment acquisition needs!
Section 179 Details
2024 Deduction Limit = $1,220,000 – All businesses that purchase, finance, and/or lease new or used business equipment during tax year 2024 should qualify for the Section 179 Deduction (assuming they spend less than $4,270,000). This deduction is good on new and used equipment, as well as off-the-shelf software. To take the deduction for tax year 2024, the equipment must be financed or purchased and put into service between January 1, 2024 and the end of the day on December 31, 2024.
2024 Spending Cap on equipment purchases = $3,050,000 – This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar-for-dollar basis. This spending cap makes Section 179 a true “small business tax incentive” (because larger businesses that spend more than $4,270,000 on equipment won’t get the full deduction.)
Bonus Depreciation: 60% for 2024 – Bonus Depreciation is offered some years, and some years it isn’t. Right now in 2024, it’s being offered. Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached. In a switch from recent years, Bonus Depreciation is now available for both new and used equipment. Bonus Depreciation is useful to large businesses spending more than the Section 179 Spending Cap. Businesses with a net loss are still qualified to deduct some of the cost of new equipment and carry forward the loss to future years.
Section 179’s “More Than 50 Percent Business-Use” Requirement – The equipment, vehicle(s), and/or software must be used for business purposes more than 50% of the time to qualify for the Section 179 Deduction. Simply multiply the cost of the equipment, vehicle(s), and/or software by the percentage of business-use to arrive at the monetary amount eligible for Section 179. See HERE for current limits on business vehicles.
Sign Your Support to Keep Section 179 Strong
We know nothing is permanent in Washington, so it’s important we stay vigilant. We’ll always keep you updated on all Section 179 developments and strive to remind Congress of our unity towards a business-friendly tax code and robust Section 179 deduction. Use the form HERE to sign your support for Section 179. Adding your name to our growing roster of business professionals helps support the cause and keeps Section 179 strong in 2025 and beyond.
For more details on limits and qualifying equipment, as well as Section 179 Qualified Financing, please read the entire Section 179 website carefully HERE. Call Preferred Capital Funding at (770) 648-8100 for your equipment acquisition needs and secure your deduction before the end of the year.
