179 Tax Deduction
Take Advantage of the Section 179 Tax Deduction
Its Commercial Vehicle Season at Dunphy Ford! Now is the time to purchase a new commercial vehicle and reap the benefits on your 2024 taxes. Not sure what all you can claim with your new commercial vehicle purchase? No worries! We're here to help break it down.
Section 179 of the IRS tax code gives businesses permission to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. In order for equipment to qualify for a 2024 Section 179 deduction, it also must be purchased and put into service by end of day on 12/31/2024.
Here's How Section 179 Works:
Section 179 allows business owners- small and large- to write off the entirety of their commercial vehicle purchase opposed to only claiming the depreciation amount year over year. With section 179, businesses can purchase needed equipment right now and get the full tax write off amount for the tax year they purchased it in. Up to $1,220,000 can be written off for the 2024 tax season.
What's the difference between Section 179 and Bonus Depreciation?
Bonus depreciation is offered some years, and some years it isn't. Right now in 2024, it's being offered at 60%.
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.
Section 179's "More Than 50 Percent Business-Use" Requirement
The only thing to note about being able to utilize the Section 179 tax deduction is that the equipment, vehicle(s), and/or software must be used for business purposes more than 50% of the time to qualify. Simply multiply the cost of the equipment, vehicle(s), and/or software by the percentage of business-use to arrive at the monetary amount eligible for Section 179.
Please visit www.Section179.Org for more information.
Here is an updated example of Section 179 at work for the 2024 tax year: