If you are a farmer or a builder, you can save money by taking advantage of Section 179 when purchasing the equipment or technology required to complete projects faster. Whether you are buying compact track loaders, large planters or pavers, purchasing equipment before the end of the year may provide additional tax savings and create a net positive change in your year-end report.
Bonus depreciation first became available in the early 2000s as a way for companies to reinvest in themselves and purchase equipment. In 2017, Congress created more opportunities for businesses to leverage equipment and vehicle financing for tax advantages when they passed the Tax Cuts and Jobs Act. The Section 179 deduction limit for new and used equipment and off-the-shelf technology has expanded, helping people offset the hefty purchase price. Check out some frequently asked questions to see if Section 179 deduction could work for your business.
What purchases qualify?
New and used equipment and off-the-shelf software.
Heavy-duty equipment, business vehicles, office furniture, computers, and off-the-shelf software may be eligible. As with any tax-related questions, consult your Certified Public Accountant (CPA) before purchasing to determine if the equipment you want qualifies for the Section 179 tax deduction.
When do I need to purchase to qualify for this year?
Any time during the year. The equipment needs to be purchased and put into service by December 31, 2023.
How much can I deduct?
$1,160,000 is the maximum deduction.
Is there a limit to the total amount of equipment purchased?
The deduction begins to phase out on a dollar-for-dollar basis after $2,890,00 is spent by a given business and goes away once $4,050,000 in purchases is reached.
Small-to medium-sized businesses can also take advantage of a bonus depreciation of 80% on new and used equipment for 2023. Bonus depreciation can be combined with the Section 179 deduction for additional savings. The bonus depreciation will expire on December 31, 2026, regardless of the fiscal year-end.
Section 179 Plus Equipment Availability Equals Opportunity
According to the Rouse Services Market Trend Report, equipment volume is up an impressive 25% versus the prior year. With increased equipment availability and softening prices, contractors can capitalize by buying used equipment while receiving Section 179 tax savings before December 31.
Set yourself up for savings by ensuring your equipment, software, or vehicles are in service for business purposes more than 50% of the time. To determine the total amount eligible for Section 179, multiply the cost of the equipment, vehicles, or software by the percentage of business use.
Remember, Form 4562 must be filled out with your taxes to select the Section 179 deduction. List all property, its price, and total deduction claimed under Section 179.
If you’re considering an equipment purchase in the current tax year, you can estimate those savings using the 2023 Section 179 Tax Deduction Calculator.
RDO Equipment Co. and John Deere Financial provide the information on this site as customer service. However, it should not be construed as tax advice. Find the most up-to-date information on Section179.org and speak to your tax advisor to ensure your business gets the most out of these tax-saving opportunities.
To see the complete list of equipment offerings or to take a machine for a test drive, visit your local RDO Equipment Co. store.