A Business Tax Deduction You Can’t Afford to Miss

Nov 14

If you are a business owner not taking full advantage of different tax codes applicable to your business, you're leaving money on the table!

The IRS loves incentivizing business owners like you and me to invest in business growth opportunities or spending patterns that will ultimately help stimulate the economy. Learning about different tax deduction opportunities at your fingertips how the wealthy become even wealthier. Once you learn the game of tax write-offs and working within the boundaries the IRS sets for you, skies the limit on what you can achieve and how you can maximize your savings! My collection of tax playbooks will walk you through these strategies that will allow you to keep more of your hard-earned money.

Today, let's dive into one of my favorite deduction topics - Section 179!

Understanding Section 179

Tax Write-Off on Big Asset Purchases

If you haven’t heard of Section 179, today’s your lucky day! This tax code allows you to write off the total cost of qualifying assets in the same tax year you purchase them.

Now, you might be thinking to yourself, what's the catch? Well, quite often, depreciation deductions are applied over multiple years. It takes years to recoup the benefits when deductions are averaged over 5, 10, 15, 20+ years. However, by leveraging Section 179, you can write off significant qualifying assets all within the year they were purchased, which allows for a considerable tax benefit to be taken immediately!

For 2024, the deduction limit is set at $1,220,000, which can seem quite large, depending on the size of your business. The IRS created Section 179 to encourage investments in equipment and technology that help boost productivity and business growth. Ultimately, this makes it a bit easier for business owners to invest in expensive assets without facing lengthy depreciation schedules. And with every purchase...we are pumping more money into the economy + sales taxes. You catch my drift ;)

Advantages of Section 179

Section 179 enables business owners to:

Take an immediate deduction for the entire cost of eligible purchases, reducing the business’s taxable income immediately.
Invest in assets critical for scaling the business—whether that means new machinery, technology, or vehicles.

Qualifying Assets Eligible for Section 179 include:

Vehicles
Software and Technology
Business Equipment (e.g., office furniture, computers, machinery, printers, scanners, and tools)

Key Regulations for Compliance with Section 179:

Business Use: Eligible assets must be used for business purposes at least 50%+ of the time.
Same Tax Year: Assets must be purchased and used within the same tax year it is claimed.
Ownership: Leased assets do not qualify under Section 179 but may be eligible for other deductions.
Example: Suppose you own a concrete company and purchase a $50,000 concrete truck. Under Section 179, you could deduct the entire $50,000 in the same tax year instead of depreciating the expense over several years.

Navigating tax deductions and maximizing eligible expenses can feel complex, but with the proper knowledge and strategies, business owners can unlock significant tax savings. Consider working with a tax advisor to ensure you fully leverage Section 179, vehicle deductions, and any other benefits available to your business.

If you're overwhelmed or unsure where to start, a 1-on-1 Tax Strategy Deep Dive might be just what you need. In these sessions, we’ll review your current tax write-offs and dig into areas where you could save even more—personalized to your unique business goals.

Happy Savings!
JMF

Disclaimer: This blog post is for informational purposes only and does not constitute legal or tax advice. Tax laws are subject to change, and their application can vary based on individual circumstances. Please consult with a tax professional for advice tailored to your situation.