What is Section 179?

Section 179 was established as a tax benefit to support small and medium-sized businesses in the United States, by allowing you to deduct the full cost of eligible equipment purchases in the same year the expense occurs. Before Section 179, businesses could only claim deductions based on the equipment's yearly depreciation. For instance, if a company bought equipment worth $100,000 with a five-year depreciation schedule, it could only deduct $20,000 each year over five years. Now, with Section 179, you can claim the entire $100,000 in the first year! In 2024, businesses can deduct up to $1.22 million in qualifying purchases, with a maximum total spend of $3.05 million. The deduction applies to both new and used equipment purchased or leased and placed in service by December 31, 2024.

How to Maximize Your Section 179 Deduction

Identify Qualifying Equipment and Property

To qualify for the Section 179 tax deduction, businesses and equipment purchases must meet the following criteria:

Qualifying equipment must be bought, financed, or leased between January 1, 2024, and December 31, 2024.
Total qualified property purchases must not exceed $3.05 million to maximize deductions.
Eligible property includes tangible, depreciable assets actively used in business, such as heavy equipment, certain vehicles, tools, office furnishings, computers, software, and specific improvements to commercial property.
Equipment must be primarily used for business (over 50% of the time).
Qualifying equipment must be purchased, leased, and placed into service by year-end.
Businesses must show a taxable profit.

Although businesses can claim up to $1.22 million in deductions, Section 179 can only be applied up to the amount of taxable income. For example, if a business's taxable income is $50,000 before applying the Section 179 deduction and the equipment purchase is $100,000, only $50,000 can be deducted in the first year.

Obtain Your Equipment Before the Year-End Deadline

The deadline for the Section 179 deduction is December 31, 2024, meaning all qualifying equipment must be acquired, delivered, and in use by that date. This deduction is not automatic, so businesses must submit IRS Form 4562 to elect it.

Easy Steps to Claim the Section 179 Deduction

If Section 179 aligns with your business's tax strategy, follow these steps:

Buy, finance, or lease qualifying equipment (new or used) between January 1 and December 31, 2024.
Ensure equipment is delivered and operational by December 31, 2024.
Complete IRS Form 4562 and any associated worksheets (find it here: IRS Form 4562).
Attach Form 4562 to your business tax return.

Final Step

Check out True North HDD's inventory to take full advantage of Section 179. Don't miss your chance to save thousands of dollars by deducting the full purchase price of new and used equipment purchases for the 2024 tax year. Call 1-844-787-8343, and a member of our experienced team can help you select the right equipment for your business and explore financing options with low monthly payments.