As the year comes to a close, this is your last chance to take advantage of valuable tax-saving opportunities. If you’ve been thinking about purchasing new equipment, now is the time to act! The Section 179 deduction and bonus depreciation can help you save big on your taxes—but only if you purchase and put the equipment into use before the clock strikes midnight on December 31. We can make it happen if you act immediately. Don’t miss out!

What is the Section 179 Deduction?

Section 179 allows businesses to deduct the full cost of qualifying equipment in the year it’s purchased and put into use. Instead of spreading the deduction out over several years, you can write it off right away, giving your business a major financial boost.

Here’s what you need to know for 2024:

• Maximum Deduction: You can deduct up to $1,220,000 for eligible equipment.
• Spending Limit: If your total equipment purchases exceed $3,050,000, the amount you can deduct starts to decrease. Once your purchases hit $4,270,000, Section 179 no longer applies.
• Financed Equipment Qualifies: You don’t have to pay for the equipment upfront to claim the deduction. If you finance a Schäffer loader, you can still deduct the full cost in 2024—even if you’re making monthly payments.

What is Bonus Depreciation?

Bonus depreciation lets you deduct a large percentage of the cost of qualifying equipment in the first year it’s used. While the percentage has been reduced in 2024, it remains a valuable tool for businesses.

Here’s how it works for 2024:

• Deduction Percentage: You can deduct 60% of the equipment cost in the first year. The remaining 40% is spread out over the equipment’s useful life.
• No Spending Limit: Unlike Section 179, bonus depreciation doesn’t have a cap on how much equipment you can purchase.
• Who Should Use It? Bonus depreciation is ideal if you’ve already maxed out your Section 179 deduction or have significant equipment purchases.

How Do Section 179 and Bonus Depreciation Work Together?

You can combine Section 179 and bonus depreciation to maximize your tax savings. Here’s an example detailing how it would work with a Schäffer loader priced at $55,000:
Scenario 1: Annual Purchases Under $3,050,000
If your total equipment purchases for the year do not exceed $3,050,000, you can fully deduct the cost of the Schäffer loader under Section 179.

• Cost of Schäffer Loader: $55,000 (example amount for illustration purposes only. Actual amount will vary based on model and specifications of your purchase)
• Section 179 Deduction: $55,000
• Bonus Depreciation: Not needed (entire cost is covered by Section 179).

Total Deduction in 2024: $55,000
This means you get to deduct the full cost of the loader, significantly lowering your taxable income.

Scenario 2: Annual Purchases Over $3,050,000
If your total equipment purchases exceed $3,050,000, the Section 179 deduction starts to phase out. For example:

• Your Total Equipment Purchases: $3,100,000 (exceeding the limit by $50,000).
• Reduced Section 179 Deduction: The maximum deduction of $1,220,000 is reduced by the $50,000 excess, leaving you with a $1,170,000 Section 179 deduction limit.

If your Schäffer loader costs $55,000:

• You can still fully deduct the loader’s cost under the reduced Section 179 limit.
• Any purchases exceeding the reduced Section 179 limit may qualify for 60% bonus depreciation.

Key Takeaways

1. If your total annual equipment purchases are under $3,050,000, Section 179 allows you to deduct the full cost of your Schäffer loader (up to $1,220,000).
2. If your purchases exceed $3,050,000, the Section 179 deduction decreases, but bonus depreciation may allow you to deduct a portion of costs above the limit.
3. Both deductions help reduce taxable income and improve cash flow, making year-end equipment purchases a smart financial move.

Why Act Now?

With only a few days left in 2024, this is your last chance to take advantage of 60% bonus depreciation for qualifying equipment. Starting January 1, 2025, the bonus depreciation percentage will drop to 40%, meaning you’ll lose out on significant tax savings if you wait.

By purchasing and placing your Schäffer loader into service before December 31, 2024, you can lock in this year’s higher deduction rate and maximize your savings. Don’t miss this opportunity, contact us today!