In recent years, Section 179 details haven’t been available until closer to the close of the current year. However, with the passing of 2018’s tax reform, program info has been available for quite some time for those looking at year-end purchases to apply Section 179.
The tax bill brought some changes to the program. Here are two key updates to Section 179 and what interested buyers need to know as year-end approaches. Those with additional questions on the program can read RDO Equipment Co.’s Section 179 FAQs to learn more.
Bonus Depreciation Expansion
Perhaps the biggest update to Section 179 isn’t about the program itself but rather a key aspect that, in the past, has gone hand-in-hand with the program. Bonus depreciation used to combine with Section 179 and be applied at 50% after $2 million in spending was reached. In 2018, the bonus depreciation percentage increased to 100% and used equipment is now eligible.
With these changes, the two aren’t typically used together; each is a valuable tax incentive on its own and each company has opportunity to choose which to use based on individual needs.
To learn more about the two important updates to bonus depreciation, read the article now.
As of this year, the Section 179 deduction limit is raised to $1 million, an increase from the $510,000 limit that was in place in 2017. This change offers more flexibility for companies to choose if Section 179 or bonus depreciation is the right strategy. And because it phases out once the $2.5 million-dollar spending cap is reached, the change is more significant for smaller companies.
While bonus depreciation, with the changes made in 2018, takes away some of the power that Section 179 has had historically, it’s worth noting one key piece of Section 179 that hasn’t changed: The program continues to apply to both new and used equipment purchases.
The used equipment market and machine values are strong this year, while new equipment continues to offer more features and technology integration. Buyers have great options with new and used purchases so, no matter which route is best for them, Section 179 remains an option applicable to both.
Even though the 2018 parameters for Section 179 have been available for a few months, year-end continues to be the time when most consider final purchases to apply the tax incentive. Upon reviewing the year’s financials and income, and talking to a trusted accountant or tax advisor, some may decide it doesn’t make sense to take advantage of Section 179.
For those who decide it is a good time to buy, the next step should be to work with a trusted equipment partner like RDO Equipment Co. A large inventory of new and used machines are available, with lease options offered as well (most of which are also eligible for Section 179). To protect the investment long after the purchase, RDO Equipment Co. also offers parts and service support to all customers.
About the Author
Dennis Howard is Vice President of Fleet and Remarketing with RDO Equipment Co. in San Antonio, TX.
Contact RDO Equipment Co. with additional questions or for more information on Section 179 and Bonus Depreciation.
Find new heavy equipment or used equipment for sale, or learn more about utilizing this tax incentive by contacting your local RDO Equipment Co. store.