Maximizing Your Tax Savings: Section 179 Tax Benefits for 2024
Introduction
As tax season approaches, many businesses are exploring ways to reduce taxable income. One powerful tool that continues to offer significant advantages is Section 179 of the IRS tax code. This deduction allows small and mid-sized businesses to write off the full cost of qualifying equipment and software in the year it’s purchased, instead of depreciating it over time.
In this blog, we’ll break down everything you need to know about Section 179 tax benefits for 2024, including limits, eligibility, and how to claim the deduction.
What is Section 179?
Section 179 is a tax deduction that enables businesses to expense the full cost of qualifying equipment or software during the year it is purchased and put into use. This helps businesses reduce taxable income immediately, rather than spreading the deduction over several years through depreciation.
Why it matters: This deduction is especially useful for small to mid-sized businesses needing to invest in tools and technology while managing cash flow.
💰 Section 179 Deduction Limits for 2024
– Maximum Deduction: $1,220,000
– Phase-Out Threshold: $3,050,000
– Bonus Depreciation: 60% (for purchases beyond the Section 179 limit)
Understanding the Phase-Out Rule
If a business purchases more than $3,050,000 in equipment, the deduction begins to phase out dollar-for-dollar. If your purchases exceed $4,270,000, you will no longer qualify for Section 179—but bonus depreciation may still apply.
Special Note on Vehicles:
Certain vehicles weighing over 6,000 lbs qualify for full or partial deductions. However, passenger vehicles have a deduction cap of $28,900 for 2024.
What Qualifies for Section 179?
To be eligible, the equipment must be:
– Purchased and used for business purposes more than 50% of the time
– New or used (as long as it’s new to you)
– Placed into service in 2024
Eligible Assets Include:
– Business-use vehicles (SUVs, vans, trucks)
– Equipment and machinery
– Computers and business software
– Office furniture and tech (e.g., servers, security systems)
How to Claim Section 179 in 2024
1.Purchase and place qualifying equipment into service by December 31, 2024
2. Use the equipment for business purposes (50%+)
3.Fill out IRS Form 4562 when filing your tax return
4.Keep all purchase documentation (receipts, financing agreements)
💡 Pro Tip: You can finance equipment and still deduct the full cost under Section 179—even if you haven’t paid it off yet!
Why Take Advantage of Section 179?
✅ Immediate tax savings
✅ Encourages business investment
✅ Applies to both new and used equipment
✅ Works with financing plans
If you’re a business owner looking to reduce your tax bill while investing in future growth, Section 179 is a smart move. With 2024 limits set at $1,220,000, this is a great time to plan purchases and consult with your accountant.
