Buying Before the end of
the year makes sense
Earlier this year, Congress introduced the American Families and Jobs Act, a package of three new tax bills. One of these bills, the Small Business Jobs Act, would expand Section 179 expensing for small businesses thus increasing the maximum eligible amount of investment and the point at which the benefit phases out.
Improving the tax treatment of capital investment is one of the most powerful pro-growth policies available to policymakers, and the change would incentivize investment. But the proposal stops short of full expenses, leaving room for improvement.
Section 179 of the Internal Revenue Service tax code allows businesses of all types to deduct the full purchase price, up to $1,160,000 for qualifying depreciable assets, including new and used construction equipment such as excavators, skid steers, forklifts, and other construction equipment.
Writing off the entire cost of equipment such as dozers and vehicles such as off-highway trucks, typically big-ticket items, offers a way for companies to significantly increase tax relief, instead of applying deductions a little at a time through depreciation. But to take advantage of section 179 on 2023 taxes, the equipment must be placed into service by midnight on December 31, 2023.
What Kind Of Equipment Qualifies For Section 179?
Equipment and vehicles purchased, financed, or leased in 2023 and used for business purposes or “income-producing activities” are potentially eligible for this deduction. Business vehicles must have a gross weight (GVW) of 6,000 pounds or more. Section 179 also covers assets like software, office furniture, and office equipment, among other items. For a comprehensive list of equipment that qualifies for section 179, click here.
Section 179 Works For Used Equipment, Too!
Keep in mind that the equipment, vehicle, or other asset doesn’t have to be brand new. Used loader backhoes, motor graders, and other heavy machinery can be eligible if they are put into use during the 2023 tax year.
It’s important to remember that to qualify for bonus depreciation, property that is classified as “listed property” under the tax code must be used more than 50 percent of the time for business. Another change brought by the Tax Cuts and Jobs Act is that computers are no longer classified as listed property. As a result, computers used less than 50 percent of the time for business may be eligible for deduction under Bonus depreciation.
Knowing the Section 179 tax deduction changes for each tax year is helpful as you plan your business purchases. Sound Heavy Machinery has always been dedicated to helping its customers and brand partners make Sound decisions. This isn’t meant to be tax advice for your business but to bring this tax benefit to your attention for your personal evaluation. This should be reviewed by your tax advisor accordingly. Right now, SHM has developed special programs and pricing to take advantage of this benefit.
To learn more about the Section 179 expense deduction, including key fundamentals for 2023, check out Section 179: The Fundamentals For 2023 on GoCurrency.com.
More information on all the Sound Heavy Machinery products and services can be found on www.SoundHM.com or by calling (910) 782-2477.