Small Business

Section 179

A tax deduction that allows businesses to deduct the full cost of qualifying equipment in the year it's purchased.

Also known as: section 179 deduction, equipment tax deduction, business vehicle deduction

What You Need to Know

Section 179 is a tax deduction that allows businesses to deduct the full cost of qualifying equipment in the year it's purchased, rather than depreciating it over several years.

How Section 179 Works:

Deduct up to $1,160,000 in 2024 (increases annually)
Equipment must be used for business purposes more than 50% of the time
Must be purchased and put into service in the same tax year
Reduces taxable income, saving money on taxes

Qualifying Equipment:

Heavy machinery and construction equipment
Computers and software
Office furniture and equipment
Vehicles (with limitations)
Manufacturing equipment

Benefits:

Immediate tax savings vs. depreciation over years
Reduces current year taxable income
Can make equipment purchases more affordable
Encourages business investment

Example: A $100,000 excavator purchased in 2024 can be fully deducted, potentially saving $25,000-$35,000 in taxes (depending on tax bracket).

Important: Consult with a CPA to ensure proper qualification and maximize tax benefits.

Sources & References

This information is sourced from authoritative government and academic institutions:

irs.gov
https://www.irs.gov/publications/p946

Put your knowledge into action with these interactive tools:

Equipment Loan Calculator

Calculate equipment financing payments and compare leasing vs buying. Free equipment loan calculator for business machinery and vehicles.

Try Calculator →

Equipment Collateral

Using purchased equipment as security for a loan, making it easier to get approved and often at better rates.

Maintenance Reserve

A fund set aside specifically for equipment maintenance and repairs to prevent unexpected financial strain.