If you’re a business owner considering new equipment purchases, you’ve likely heard about IRS Section 179. It’s a powerful tax incentive that allows you to deduct the full purchase price of qualifying equipment, helping you save on your taxes while investing in your business. When paired with equipment financing, Section 179 becomes an even more attractive option, enabling you to preserve your cash flow while reaping significant tax benefits. Here’s everything you need to know about equipment financing and Section 179 tax savings. 

What Is IRS Section 179? 

IRS Section 179 is a tax code designed to help businesses by allowing them to deduct the cost of qualifying equipment and software purchased or financed during the tax year. Instead of depreciating these assets over several years, you can deduct the entire purchase price in the year the equipment is put into service. For 2024, the deduction limit is $1,220,000, with a spending cap of $3,050,000. 

This tax incentive can significantly reduce your taxable income, allowing you to reinvest those savings back into your business. 

How Section 179 and Equipment Financing Work Together 

The real magic happens when you combine Section 179 with equipment financing. Here’s how: 

Immediate Deduction, Spread Payments: With equipment financing, you can make monthly payments for the equipment over time, but still take the full Section 179 deduction in the year of purchase. This means you can enjoy the tax savings up front while preserving your working capital. 

Cash Flow Benefits: Financing allows you to avoid large upfront costs. By spreading the cost of the equipment over time, you keep your cash flow intact, which can be crucial for day-to-day operations. Plus, the tax savings you gain from Section 179 can help cover some of your monthly payments. 

No Need to Wait: If you’re worried about missing out on end-of-year tax savings but don’t have the cash to purchase outright, equipment financing is the perfect solution. You can finance the equipment today, get the tax deduction this year, and pay off the purchase over time. 

What Equipment Qualifies for Section 179? 

Most business-related equipment qualifies for the Section 179 deduction. This includes: 

Machinery and Equipment: This covers a wide range of items, from heavy machinery to medical aesthetic equipment, and office equipment like printers and computers. 

Business Vehicles: Certain vehicles that are used for business purposes also qualify. 

Software: Off-the-shelf business software that is used for internal business operations is eligible. 

Furniture and Fixtures: Office furniture and certain property improvements are also covered. 

To qualify, the equipment must be purchased or financed and put into use before the end of the tax year (December 31, 2024). 

Why Take Advantage of Section 179 Now? 

Timing is crucial when it comes to Section 179, and acting before the end of the year can bring significant benefits. First, making your purchase sooner allows you to maximize your tax savings by claiming the deduction on your 2024 taxes. Additionally, the Section 179 deduction limits can change from year to year, meaning waiting could result in missing out on the current, more generous deduction. Finally, many equipment manufacturers and vendors offer attractive year-end deals. By financing your purchase, you can take advantage of these offers while also locking in the valuable Section 179 tax benefits. 

How to Get Started with Equipment Financing 

The process of combining equipment financing with Section 179 tax savings is simple: 

  1. Identify Your Equipment Needs: Determine what equipment or software your business needs to stay competitive and efficient.
  2. Apply for Financing: Contact Financial Partners Group to explore the best options for your business. Make sure the financing terms align with your budget and cash flow.
  3. Purchase or Lease the Equipment: Once approved, you can acquire the equipment while spreading out the payments.
  4. Put the Equipment to Use: To qualify for Section 179, make sure the equipment is put into service by the end of the year.
  5. Claim Your Deduction: When tax season arrives, work with your accountant to claim the Section 179 deduction and reduce your tax bill.

Final Thoughts 

By combining equipment financing with the benefits of IRS Section 179, you can acquire the tools and technology your business needs today while minimizing the financial impact. This smart financing strategy not only keeps your cash flow healthy but also provides you with immediate tax savings. 

The end of the year is fast approaching, so now is the perfect time to explore your financing options and take advantage of Section 179 before it’s too late.  

If you’re ready to grow your business with new equipment, we’re here to help. Contact us today to learn more about how we can support your financing needs. 

*Disclaimer: To ensure full compliance and address any specific details or changes in tax law, consulting a tax professional is recommended.*