Maximize tax savings with Section 179. Deduct full equipment costs in 2024. Learn how it works, plus get tips and examples to boost your bottom line.
As we approach the end of 2024, now is the perfect time for manufacturing leaders to evaluate their investment strategies and take advantage of potential tax savings. One powerful way to achieve this is through Section 179 of the IRS tax code, which allows businesses to deduct the full cost of qualifying equipment in the year it’s purchased. This blog will break down what Section 179 is, how it works, and how manufacturers can leverage it to boost their bottom line. Plus, we'll provide a comprehensive FAQ section to address common questions.
Section 179 is a tax deduction aimed at encouraging businesses to invest in equipment. Unlike traditional depreciation, which spreads the deduction over several years, Section 179 allows you to deduct the full purchase price of qualifying equipment and software in the year it is placed into service. This immediate deduction helps businesses reduce taxable income, improve cash flow, and reinvest in their operations faster.
Key Benefits of Section 179:
Important Note: Morris Group is a trusted distributor of CNC machine tools, but we do not provide tax advice. Always consult with a certified tax advisor to develop a strategy that fits your unique financial situation.
For 2024, the Section 179 deduction limit is set at $1,220,000, with a phase-out threshold beginning at $3,050,000. This means that businesses can deduct up to $1,220,000 for equipment purchases, as long as total investments do not exceed $3,050,000. The deduction phases out entirely if total purchases exceed $4,270,000.
Example Calculation: Let’s consider a real-world example using an equipment purchase from Morris:
By utilizing Section 179, your effective equipment cost is significantly reduced, freeing up capital that can be reinvested into your business.
Yes, businesses can take advantage of both Section 179 and bonus depreciation. For 2024, bonus depreciation allows you to deduct an additional 60% of the cost for any amount that exceeds the Section 179 limit. This applies to both new and used equipment, maximizing your first-year deductions.
Bonus Depreciation Example: Suppose your total equipment purchase is $1,250,000:
Planning Tip: Ensure your equipment is fully operational and “placed in service” by December 31, 2024, to qualify for these deductions. Plan installations and setup early to meet this requirement.
Morris is committed to providing the highest-quality CNC machine tools and automation solutions. While we do not provide tax or financial advice, our experts can guide you in selecting the right equipment to meet your manufacturing goals and take advantage of year-end purchasing incentives.
We offer a wide range of machines ready for immediate delivery, including:
Our knowledgeable team can help you identify the most suitable machines for your production needs, ensuring you make a smart investment that aligns with your business objectives.
Get in Touch: Have questions about our available equipment? Contact your local Morris representative today for personalized assistance. Connect with Us Now.
The deadline to leverage Section 179 for 2024 is fast approaching. Investing in new equipment now can enhance your manufacturing capabilities and deliver immediate financial benefits through substantial tax deductions.
Helpful Resources:
1. What qualifies as “placed in service” for Section 179?
The equipment must be fully operational and ready for its intended use by December 31, 2024. Merely purchasing the equipment is not sufficient; it must be installed and functional.
2. Can I use Section 179 for used equipment?
Yes, Section 179 applies to both new and used equipment, provided it is new to your business and meets the "placed in service" requirement.
3. What’s the difference between Section 179 and bonus depreciation?
Section 179 allows you to deduct the full purchase price of eligible equipment up to a specified limit. Bonus depreciation applies after the Section 179 limit is reached, allowing an additional 60% deduction on remaining costs.
4. Do I need a tax advisor to utilize Section 179?
Yes, consulting a tax professional is highly recommended. They can ensure you’re applying the deductions correctly and help you tailor a strategy to maximize your tax benefits.
5. How can Morris assist with my Section 179 purchases?
While Morris does not provide tax or financial advice, we offer a wide selection of CNC machines and automation solutions, ready for quick delivery. Our team can help you find the right equipment to meet your needs and ensure you’re prepared to take full advantage of the deduction.
Morris Group Inc. is not a qualified tax advisor. You should always consult with your accountant prior to making any purchase based on tax consequences.