Updated for 2022
The "Tax Cuts and Jobs Act" was passed by both the House and Senate and signed into law on Dec. 22, 2017. This bill expanded the Section 179 deduction limit, which is good on new and used equipment, as well as off-the-shelf software. In addition, businesses can take advantage of 80% bonus depreciation on both new and used equipment for the entirity of 2023.
1. Section 179 provides the allowable deduction limit of $1,160,000 on the cost of new and used capital equipment purchased with an investment cap of $2,890,000. Section 179 increase is permanent and will be indexed for inflation in future years.
2. Bonus depreciation can be combined with Section 179 deduction for additional savings. Bonus depreciation enables you to take additional depreciation on new and used (new to you) capital equipment purchases.
Bonus depreciation expires on December 31, 2026, regardless of your fiscal year-end.
With or without Section 179 and bonus depreciation, your tax savings over the depreciable life of the equipment will be the same. However, the purpose of this tax benefit is to accelerate growth in the economy right now. The money you save in the short term can be reinvested in capital improvements, expansion projects, and more, so don't wait - buy that new equipment today.
Important
The information on this site is provided as a customer service by RDO Equipment Co. and John Deere Financial. However, it should not be construed as tax advice. We strongly recommend that you consult with your tax advisor regarding how these tax-saving opportunities apply in your situation.