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It's that time of year to consider tax deductions, so why not give your business a holiday gift?
The sooner you buy, the sooner you can deduct over a million dollars on your taxes through the 179 deduction. Your company may wish it had taken advantage of this benefit earlier.
What’s the 179 Deduction?
If you’re unfamiliar with it, the Section 179 Tax Deduction is good for new and used equipment that U.S. companies use for manufacturing, service, and other day-to-day operations. The IRS allows you to deduct up to $1,220,000.
This deduction is good on new and used equipment, as well as off-the-shelf software. To take the deduction for tax year 2024, the equipment must be financed or purchased and put into service between January 1, 2024 and the end of the day on December 31, 2024.
The 179 deduction is often described as a small-business tax incentive because it applies to companies that purchase less than $3.05 million in equipment during the year. In addition to the first-year write-off, depreciation deductions can be taken in successive years, which are explained in more detail in this chart.
When’s the Best Time to Buy?
The window for 179 deductions closes on December 31 of each year. The sooner you make a decision about new equipment, the sooner you can apply the deduction - just keep in mind that it applies to the tax year in which it was purchased.
You don’t even have to buy! An equipment lease also qualifies under the 179. So, if the decision-makers at your company are hesitating because of the large cost, here’s a leasing example to think about:
A $20,000 lease can cost just $20 per business day. Say you decide to wait, instead of leasing now. You will spend far more than $20 daily on testing, quality assurance, production costs, and other inefficiencies from operating old equipment.
If you go ahead and set up a lease, you can start saving money with efficient new equipment and qualify for the 179 deduction at the same time.
Will Our Equipment Qualify?
Chances are, the equipment you buy or lease from Kett will qualify for the 179 deduction. It was designed to be a broad tax incentive that makes acquiring new equipment attractive to small businesses.
According to the IRS, all of the following types of equipment qualify for the 179 deduction:
- Equipment, including machines, purchased for business use
- Tangible, personal property used for business
- Equipment that has a dual business-personal use
- Commercial vehicles with a gross weight of 6,000 lbs or more
- Computers and off-the-shelf software
- Office furniture and equipment
- Non-structural property attached to business buildings
The meters, testers, gauges, and other instruments and equipment sold by Kett should fall easily within 179 deduction guidelines.
What’s the Next Step?
Reach out to us and mention that you’d like to start a new equipment lease or purchase. We’ll help you get all the documentation you’ll need to get your 179 deduction in the correct tax year.
