Did Your Business Invest in Equipment in 2024? Don’t Forget About the Section 179 Tax Deduction
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As we approach the end of the year, we want to remind business owners to utilize Section 179 of the IRS Tax Code. Section 179 can be extremely profitable for your business, allowing you to invest in equipment while retaining more of your tax dollars. According to the IRS under the 2018 tax reform, and subject to limitations, businesses are able to deduct the full purchase price for qualifying equipment – yes, that could include the Panhandle Power Wash Supply you purchased in 2024! Prior to the reform, the most businesses were allowed to deduct was a small portion of each qualifying equipment’s value based on depreciation, literally taking it years to complete. Now, Section 179 allows businesses to deduct the full purchase price in the year the qualifying equipment was put to use for your business. According to Section179.org, this includes qualifying equipment that was purchased in-full, as well as financed. If you purchased a piece of equipment in 2024, be sure to check with your CPA or tax preparer about deducting that full amount, as well as eligibility for a bonus depreciation.
Buy Early. If you want to take advantage of the Section 179 benefits, it’s important to note that in order for equipment purchased in 2024 to qualify, it must be put to use in 2024 for your business as well. We know it’s common practice to purchase equipment in the fourth quarter of the year, but don’t delay because equipment that is simply newly purchased but sitting on your lot may not qualify until the year it is put into service.
What’s new for 2024 – 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. In addition to these limits, businesses can also take advantage of a 60% bonus depreciation on both new and used equipment for the entirety of 2024.
Bring Purchase and Setup Records to your Tax Appointment. If you purchased equipment in 2024, you will need records on the date of purchase, the date you started using the equipment, and all costs associated with the purchase, like shipping and setup. If you lost any of this documentation, check with us at Panhandle Power Wash Supply to get a copy. Your tax preparer can take the Section 179 deduction on certain qualifying business property by electing it, which is done by filling out the required form and including with your business tax return. Please consult with your certified tax professional for eligibility and limitations that apply to you.
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