As 2024 draws to a close, savvy business owners are exploring all available options to reduce tax liability and reinvest in growth. One powerful way to achieve this is through the Section 179 tax deduction. Paired with the easy and competitive financing options offered through MachineryMax, it’s a win-win for businesses looking to acquire machinery and reap immediate financial benefits. Here’s what you need to know to leverage these opportunities effectively.
What Is the Section 179 Deduction?
Section 179 is a provision in the U.S. tax code that allows businesses to deduct the full purchase price of qualifying equipment and software in the year they are placed in service, rather than depreciating them over several years. For 2024, businesses can deduct up to $1,220,000 as long as their total equipment purchases do not exceed $3,050,000. This tax-saving tool is crucial for companies looking to make strategic year-end investments.
Key Points to Remember:
- Eligible Equipment: New and used equipment that is “new to you” qualifies, provided it is used for business purposes more than 50% of the time.
- Qualifying Examples: Machinery, tractors, office furniture, computers, and other tangible business assets.
- Non-Qualifying Assets: Land, buildings, billboards, and certain non-movable items do not qualify.
The Added Advantage of Bonus Depreciation
If your total purchases exceed the Section 179 cap of $3,050,000, bonus depreciation can help. For 2024, businesses can depreciate an additional 60% of the cost of eligible assets in the first year. This benefit ensures that even higher-value investments offer substantial upfront savings.
Direct Purchases and Section 179: Maximize Your Tax Benefits
If your business is ready to invest in equipment without financing, Section 179 still provides substantial benefits. By making an outright purchase, you can:
- Deduct the entire purchase price in 2024, reducing your taxable income and increasing your savings.
- Benefit from immediate tax relief, which frees up funds to reinvest in other areas of your business.
- Simplify financial management by avoiding the complexities of loan or lease payments.
Direct purchases are a powerful strategy for businesses with available capital, allowing you to capitalize on Section 179 deductions while maintaining full ownership of your equipment from day one.
Financing with MachineryMax: Simple and Effective
At MachineryMax, we aim to streamline your purchasing process. Through our partnership with First Citizens Bank Equipment Finance, you can secure up to $250,000 in credit to finance equipment. Our process is straightforward:
- Apply Online: Complete your application in just 3 minutes.
- Sign Electronically: Convenient, secure document signing.
- Receive Funds Quickly: Fast processing ensures timely access to financing.
Why Finance Your Equipment?
Combining Section 179 with our financing options amplifies your savings. Here’s how:
- Immediate Tax Benefits: Deduct the full purchase price in 2024 while spreading out payments over time.
- Preserve Capital: Keep cash on hand for other investments or operating expenses.
- Accelerated Return on Investment: Reduced upfront costs and tax savings increase cash flow, fueling growth.
Real-World Example of Savings
Let’s break down the impact. Say your business purchases a $250,000 piece of machinery:
- Section 179 Deduction: $250,000
- Tax Savings: For this example, we’ll use a 21% tax rate, which results in $52,500 in savings. However, it’s important to note that individual business tax rates can vary. Your actual tax rate and savings may differ, so consult with your tax advisor for a personalized calculation.
- Net Cost After Savings: Your effective cost is $197,500, significantly less than the initial outlay.
If your total equipment expenditure surpasses $3,050,000, bonus depreciation kicks in to provide further tax advantages, helping you deduct a substantial part of that investment upfront.
How to Take Advantage Before Year-End
To claim your deduction, ensure your equipment is both purchased and placed into service by December 31, 2024. While the process is simple—filling out Part 1 of IRS Form 4562—we recommend consulting with your tax advisor to optimize your tax strategy.
Ready to Grow Your Business?
Ready to take the next step? View inventory in the MachineryMax Marketplace and the upcoming auctions to find your new equipment.
Need financing? Apply now and purchase before the year ends to maximize your tax benefits.
