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on Thursday, December 19, 2024
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Staying competitive requires investing in the best tools and machinery. With Section 179 of the U.S. tax code, 2024 presents an excellent opportunity to make those necessary equipment purchases while maximizing your tax savings. Here's how Section 179 works and why it’s a game-changer for farmers.
What Is Section 179?
Section 179 allows businesses, including farms, professional lawn care services, snow removal companies, and construction businesses, to deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year. Instead of spreading deductions over several years through depreciation, you can claim the entire amount in the year of purchase. This means you can reduce your taxable income significantly while investing in your operation's future.
Key Benefits of Section 179 in 2024
- Immediate Tax Relief: By deducting the full cost of eligible equipment, you lower your taxable income for 2024, putting more money back into your pocket when you need it most.
- High Deduction Limits: 2024 Section 179 provides a deduction on the cost of new and used capital equipment purchases — an investment cap applies. The deduction limit for 2024 is $1,220,000.
- Bonus Depreciation: In addition to Section 179, you can take advantage of bonus depreciation, which allows you to deduct a percentage of equipment costs above the Section 179 limit. For 2024, bonus depreciation is set at 80%, making it an excellent supplement. Bonus depreciation is currently scheduled to phase out over the next 3 years (see table below).
- Encourages Equipment Upgrades: Newer equipment improves efficiency and productivity, whether it's upgrading your tractor, combine, or irrigation system. Section 179 helps make these upgrades more affordable.
Bonus Depreciation Phase-Out Schedule:
| PLACED IN SERVICE DATE |
BONUS DEPRECIATION |
| Today to December 31, 2024 |
60% |
| January 1, 2025, to December 31, 2025 |
40% |
| January 1, 2026, to December 31, 2026 |
20% |
| January 1, 2027, and thereafter |
0% |
Example Scenario
Imagine you’re a farmer who purchases a new tractor for $100,000 in 2024. Under Section 179, you can deduct the entire $100,000 from your taxable income, saving you thousands of dollars come tax season. If you also finance the tractor, you’ll enjoy the tax savings upfront while spreading out your payments over time.
Consult Your Tax Advisor
While Section 179 offers tremendous benefits, it's essential to consult a tax professional to ensure you’re leveraging it correctly. They can help you determine which purchases qualify and how to maximize your savings.
Invest in Your Business's Future
Section 179 is more than a tax benefit; it’s an opportunity to invest in your farm’s growth. By upgrading equipment and taking advantage of significant deductions, you position your operation for long-term success. Ready to explore your equipment options? Visit your local John Deere dealership to learn about the latest models and financing plans that fit your needs. Don't miss out on the chance to drive your farm forward in 2024!
**IMPORTANT: GreenMark Equipment 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.
