When you’re nearing the end of your growing or building season, you're most likely spending time in front of the computer screen instead of your machine's in-the-cab display. You sit down, click open your Fleet Management Software (FMS), QuickBooks and numerous other tools to consider what equipment or technology could make a difference in next year’s operation.
Before you start calculating this year's return on investment (ROI), consider the potential savings from Section 179 tax deduction. Whether you've benefited from deducting the total cost of equipment or technology in the past, or this is your first year applying for the credit, review eight frequently asked questions we've received.
#1 What is Section 179?
A part of the IRS tax code, Section 179 is a type of tax deduction for businesses to offset equipment bought or financed during the last calendar year.
#2 What Qualifies for Section 179?
- New or used equipment that operates more than 50% for business purposes.
- Heavy equipment or vehicles that weigh more than 6,000 pounds
- Although inherited used equipment does not qualify for Section 179.
#3 Does Technology Qualify?
Yes. Off-the-shelf and custom-built technology qualifies. “Custom-built” technology must also be available to the public.
#4 How Much Can I deduct?
$1,220,000 is the maximum deduction.
#5 Is There a Limit on The Amount of Equipment Purchased?
The deduction begins to phase out on a dollar-for-dollar basis after $3,050,000 is spent by a given business and goes away once $4,270,000 in purchases is reached.
#6 What’s a Bonus Depreciation?
Small-to-medium-sized businesses can take advantage of a 60% bonus depreciation on new and used equipment for 2024. The 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.
#7 When Do I Have to Purchase?
You can purchase the equipment at any time during the year. However, it must be put into service by December 31, 2024.
#8 What to Do Next?
Contact your trusted equipment partner for your desired heavy machinery or technology solution. When an equipment expert understands your operation, they can offer advice addressing your specific circumstances, like if they think the machine will work more than 50% in the field or job site.
Also, watch any inflation rate adjustments that could occur after the U.S. presidential election concludes and elected officials take the oath of office. Inflation rate adjustments affect tax planning, especially if you are considering significant equipment investments. Consulting with a tax professional could be very helpful if you have specific questions about how these changes might affect your situation.
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.
Visit your local RDO Equipment Co. store to see the complete list of equipment offerings or to test drive a machine.
RDO Equipment Co.
Founded in 1968, RDO Equipment Co. sells and supports intelligently connected agriculture, construction, environmental, irrigation, positioning, and surveying equipment from leading manufacturers, including John Deere, Vermeer, and Topcon. With more than 80 locations across the U.S. and partnerships in Africa, Australia, Mexico and Ukraine, we deliver creative solutions so our customers can grow and build the world.
