Updated for 2021
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, the bill expanded bonus depreciation to 100% and now includes used equipment.
1. Section 179 provides the allowable deduction limit of $1,050,000 on the cost of new and used capital equipment purchased with an investment cap of $2,500,000. 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.
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.
Take a look at 10 frequently asked questions about section 179 and bonus depreciation.