Section 179 Tax Deduction
Section 179 is an attractive tax deduction for small and medium businesses. It's also very easy to understand and utilize.
Section 179 at a Glance for 2024
Contact your tax professional to see if Section 179 is right for you. For more details on limits, qualifying purchases, and Section 179 Qualified Financing, please visit or call us.
What is the Section 179 Deduction?
Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It's an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.
Section 179 is more beneficial to small businesses than ever.
Section 179 is one of the few government incentives available to small businesses, and has been included in many of the recent Stimulus Acts and Congressional Tax Bills. Although large businesses also benefit from Section 179 or Bonus Depreciation, the original target of this legislation was much needed tax relief for small businesses - and millions of small businesses are actually taking action and getting real benefits.
Businesses use Section 179 to purchase needed equipment:
For most small businesses, the entire cost of qualifying equipment can be written-off on the 2024 tax return (up to $1,220,000).
Section 179 does come with limits - there are caps to the total amount written off ($1,220,000 for 2024), and limits to the total amount of the equipment purchased ($3,050,000 in 2024). The deduction begins to phase out on a dollar-for-dollar basis after $3,050,000 is spent by a given business (thus, the entire deduction goes away once $4,270,000 in purchases is reached), so this makes it a true small and medium-sized business deduction.
Who Qualifies for Section 179?
All businesses that purchase, finance, and/or lease new or used business equipment during tax year 2024 should qualify for the Section 179 Deduction (assuming they spend less than $4,270,000).
Most tangible goods used by American businesses, including "off-the-shelf" software and business-use vehicles, like the Sprinter, qualify for the Section 179 Deduction.
For basic guidelines on what property is covered under the Section 179 tax code, please refer to the list of qualifying models. If the vehicle is leased/purchased and placed in service prior to December 31 of the year you are filing taxes for and meets certain other conditions.
For 2024, $1,220,000 of assets can be expensed; that amount phases out dollar for dollar when $3,050,000 of qualified assets are placed in service.
What vehicles are allowed?
Avondale Dealerships offers several SUVs over 6,000 pounds that may qualify for the Section 179 Tax Deduction. IRS Publication 946 mentions the maximum expense deduction for an SUV over 6,000 pounds as being $30,500 for 2024.*
*Disclaimer: Please consult with your tax advisor for more details on the possible tax deductibility.
What's the difference between Section 179 and Bonus Depreciation?
Bonus depreciation is only offered in select years. For 2024, it is being offered at an 60% reduction.
The most important difference is both new and used equipment qualify for the Section 179 Deduction (as long as the used equipment is "new to you"), while Bonus Depreciation has only covered new equipment only until the most recent tax law passed. In a switch from recent years, the bonus depreciation now includes used equipment.
Bonus Depreciation is useful to very large businesses spending more than the Section 179 Spending Cap (currently $3,050,000) on new capital equipment. Also, businesses with a net loss are still qualified to deduct some of the cost of new equipment and carry-forward the loss.
When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation - unless the business had no taxable profit, because the unprofitable business is allowed to carry the loss forward to future years.
*Base MSRP excludes tax, title, license, government fees, transportation, handling charges, registration, destination charges, and a $275 documentary fee. Price does not include additional options selected by the customer. All advertised vehicles are subject to actual dealer availability. Must qualify for all applicable rebates and discounts. Prices include all dealer rebates and dealer incentives. Please check with your dealer for more information. Colors shown are the most accurate representations available. Information provided is believed accurate, but all specifications, pricing, and availability must be confirmed in writing (directly) with the dealer to be binding. The participating Dealer nor Dealer.com is responsible for any inaccuracies. Some available vehicles may not be recall-free. *
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AMG® and 4MATIC® are registered trademarks of Mercedes-Benz Group AG.
