Understanding Section 179 for 2024: Maximizing Your Tax Benefits for Business Investments
As a small or medium-sized business owner, you’re likely familiar with the significant costs associated with acquiring equipment. However, there’s a silver lining: Section 179, where tax deductions can offset some of the equipment expenses. The key is to complete your business’s purchases by December 31, 2024. If you are interested in taking advantage of tax savings while growing your business, it’s worth exploring Section 179.
What is Section 179?
The U.S. government has a tax incentive called Section 179 to encourage businesses to invest in equipment and themselves. This provision from the (IRS) tax code allows small and medium-sized enterprises to deduct the entire cost of eligible equipment that was acquired or financed during the current tax year. If a business purchases a qualifying piece of equipment, they can deduct the full purchase price from their gross income.
Section 179 was implemented to provide businesses with a financial boost to invest in their operations and expand their capabilities. By allowing them to deduct the full cost of eligible equipment (including heavy machinery, vehicles, computers/software, and furniture), the government aims to stimulate business growth, capital investment, and overall economic activity.
Who qualifies?
The Section 179 tax deduction is available to all business owners, regardless of whether they purchase, finance, or lease new or used business equipment during the current tax year.
What is new in 2024?
In 2024, Section 179 has some changes. The Section 179 deduction limit has been increased by $60,000 compared to 2023, now standing at $1,220,000. This deduction can be claimed on both new and used business equipment.
In the 2024 tax year, the maximum spending cap on equipment purchases that allows for the full utilization of the Section 179 deduction has been set at $3,050,000. This means that businesses can spend up to this amount on qualifying equipment purchases before the available Section 179 deduction begins to be reduced on a dollar-for-dollar basis.
For 2024, the bonus depreciation rate is offered and has been adjusted to 60 percent. This updated rate applies to both new and used equipment purchases, offering businesses increased flexibility in their asset acquisition strategies.
What are the benefits?
Section 179 offers numerous tax advantages that can significantly benefit businesses looking to invest in equipment. Section 179 Deduction has an immediate expense deduction which provides businesses with significant tax savings to deduct the full purchase price of all qualified equipment purchases whether they are new or used. This tax deduction is extra beneficial this year due to the various Federal Discount Rate increases implemented in 2023 and 2024. Section 179 allows businesses to deduct the full price purchase in the year it’s placed in service, rather than depreciating it over time, which can offset the impact of rising interest rates.
Section 179 can also improve efficiency and scalability for a business. New equipment often leads to lower operating costs and increased productivity, allowing businesses to scale more effectively.
Next Steps:
If you’re interested in capitalizing on the potential tax benefits of Section 179, OCS recommends you:
– Talk to Your Accountant or Tax Advisor. They can clarify if any equipment you’ve purchased in 2024 is applicable and estimate the amount of your deduction.
– Contact OCS. Whether you’re a repeat customer working with our Account Management Team or a new client collaborating with a Business Development Officer, our finance professionals are a terrific resource for you and any questions you have to help finance equipment before the end of 2024!
– Apply and Get Pre-Approved. Our pre-approvals are good for 90 days and provide peace of mind when equipment shopping.
– Purchase by December 31, 2024, and reap the benefits!
Ready to get started? Contact an OCS finance professional any time at 877-701-2391 or ocs@oakmontfinance.com. Ready to apply today? Click here to get started on our 5-minute application.
Are you curious about what the previous year’s benefits looked like under Section 179? Check out the links below:
Disclaimer: Consult with your accountant or tax advisor to weigh the pros and cons of taking this deduction to determine if it will positively benefit your business. Oakmont Capital Services does not provide tax advice or recommendations.
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