What is Section 179?

How to Apply Section 179 Tax Savings to a Compact Equipment Purchase

Business has been good this year. So what does Section 179 tax deduction mean for you and your farm, construction company, or landscaping business? Here’s our overview of what Section 179 is, how it applies to a compact equipment purchase, and what we’re doing at Bobcat of Houston to help you save money on new and used machines. 

What is Section 179?

Section 179 of the IRS tax code helps business owners lower their upfront expenses. In 2024, you can spend up to the deduction limit of $1,220,000. Compact equipment counts for a full deduction if it’s used for business purposes at least 50% of the time. So if we were a construction business that spent $80,000 on a new Bobcat compact track loader with a couple attachments, we would get an $80,000 deduction on our tax bill at the end of the year. 

Section 179 & Compact Equipment

Section 179 covers anything from excavators and loaders to mowers, tractors, and compaction equipment. All you’ve got to do is purchase or finance that piece of new or used equipment before December 31, 2024. Then, you’ll be eligible for a full deduction on your next tax return. 

As a side note: If you’re looking at a job where you would rent a piece of equipment for 18 months or more (and if that job doesn’t have special parameters that make a rental necessary), it could save you a lot of money to purchase before the end of the year. That way, you can reinvest with Section 179, and you can use that machine for future jobs.   

What Do We Have Going On?

With the 2024 deadline coming up, we want to make it easy for you to save money. Here’s what we have going on right now: 

In-Stock Inventory 

We’ve got lots of machines available. If you come to one of our locations, you’ll see the full range of what we offer, and you’ll keep your wait time low. 

Flexible Financing & Cash Rebates 

For a limited time, we’ll have flexible financing opportunities for construction and grounds maintenance equipment. Really, our main goal here is to help customize payment schedules to your needs. 

Extended Warranty 

We’re offering coverage that goes beyond just the standard warranty period. We like this extended warranty package because it protects your equipment even after the original warranty ends. 

Steps to Calculate Your Section 179 Deduction

Here’s a quick refresher on how to calculate a Section 179 deduction: 

1. Identify Your Equipment

 Make sure that your excavator, loader, mower, or tractor checks these boxes: 

• Financed or purchased between 01/01/2024 and 12/31/2024 (new or used) 

• Used for business purposes more than 50% of the time
  

2. Total Your Costs

Add up everything you spent on equipment this year. Enter that into this Section 179 deduction calculator. 

3. Compare Your Costs to the 2024 Limits

In 2024, if you spend $3.05 million or less, then you can deduct up to $1.22 million.   

4. Fill Out Section 179 Form on Your Tax Return

Complete IRS Form 4562. If this is your first time, here are instructions for completing Form 4562. 

Section 179 and Bonus Depreciation

Don’t forget about bonus depreciation. If this is your first year using the machine, you can deduct an extra percentage of the remaining cost (on top of Section 179). You probably already know this, but bonus depreciation percentages have been consistently decreasing for a couple years now. For 2024, you can deduct a reduced rate of 60% for compact equipment. 

Check It Out

This is a great time to buy new and used equipment. Don’t miss the chance to reinvest in your business and get a decent tax break. If you’re interested in saving with Section 179, take a look at our limited-time deals. When you’re ready, give us a call! 

*Bobcat of Houston is not a tax advisor. The information provided by Bobcat of Houston, its employees, or its representatives is for general informational purposes only. It is not intended to constitute tax, financial, or legal advice. Bobcat of Houston does not provide tax advisory services, and any information, documents, or discussions should not be construed as such. Please consult your financial advisor or tax attorney for more information.