Sources:
https://www.irs.gov/instructions/i4562
https://www.section179.org/section_179_deduction/
As we approach the end of the year, we want to remind business owners to utilize Section 179 of the IRS Tax Code. Section 179 can be extremely profitable for your business, allowing you to invest in kubota equipment while retaining more of your tax dollars. According to the IRS under the 2018 tax reform, and subject to limitations, businesses are able to deduct the full purchase price for qualifying equipment – yes, that could include the Kubota you purchased in 2024!
Prior to the reform, the most businesses were allowed to deduct was a small portion of each qualifying equipment’s value based on depreciation, literally taking it years to complete. Now, Section 179 allows businesses to deduct the full purchase price in the year the qualifying kubota equipment was put to use for your business. According to Section179.org, this includes qualifying equipment that was purchased in-full, as well as financed. If you purchased a piece of equipment in 2024, be sure to check with your CPA or tax preparer about deducting that full amount, as well as eligibility for a bonus depreciation.
If you want to take advantage of the Section 179 benefits, it’s important to note that in order for equipment purchased in 2023 to qualify it must be put to use in 2023 for your business as well. We know it’s common practice to purchase equipment in the fourth quarter of the year, but don’t delay because equipment that is simply newly purchased but sitting on your lot may not qualify until the year it is put into service.
According to Section179.org, this year’s deduction limit is $1,160,000 (this is up from $1,080,000 in 2022). This is a full $80,000 increase from last year. This means U.S. companies can deduct the full purchase price of ALL qualified equipment purchases, up to the limit of $1,160,000. In addition, the “total equipment purchase” limit has been raised to $2,890,000 (up from $2.7 million in 2022), meaning more equipment can be purchased and put to work before the $1,160,000 deduction limit is affected. The deduction can include both new and used qualified equipment. Be sure to discuss these limits with your tax preparer to see how your business qualifies.
If you purchased kubota equipment in 2024, you will need records on the date of purchase, the date you started using the equipment, and all costs associated with the purchase, like shipping and setup. If you lost any of this documentation, check with us to get a copy. Your tax preparer can take the Section 179 deduction on certain qualifying business property by electing it, which is done by filling out the required form and including with your business tax return. Please consult with your certified tax professional for eligibility and limitations that apply to you.