The Tax Cuts and Jobs Act of 2017 has improved tax benefits for purchasers of equipment by updating the previous 50% Bonus Depreciation rules in two key ways:
- Customers can reduce the cost of their equipment and keep more of their money by using the Section 179 deduction. This allows businesses to deduct the full purchase price of qualifying equipment bought, financed and installed during 2024. In doing so, businesses invest in themselves by purchasing the equipment they need and reducing their tax liability. They can invest in new or used equipment.
- As of January 2, 2024, the Section 179 deduction for 2024 is $1,220,000. This means U.S. companies can deduct the full purchase price of ALL qualified equipment purchases up to the limit of $1,220,000.
Leasing equipment and software while leveraging Bonus Depreciation can help increase your cash flow as well as your after-tax profits. One big advantage is that you can write-off 100% of equipment purchased without actually spending that much during the year if you use a non-tax capital lease. You take full advantage of immediate tax write-offs and make smaller payments, leaving more cash in the business.
Note: This is also in place for the years 2018 through 2023.
This is not legal, tax or financial advice. You should consult with your tax advisor for the specific impact to your business.
