What is Section 179?
Section 179 is a provision in the IRS tax code that allows businesses to deduct the costs of purchasing equipment for their company. Vehicles qualify for the deduction, and it is typically the full purchase price of the vehicle. There are some weight limits, and only certain vehicles qualify for the full deduction. However, many small to medium business owners can benefit from Section 179, allowing them to make the investments they need and reduce their tax burden. There are caps on Section 179 deductions to ensure it stays a true small to medium business benefit.
Who Is Eligible for Section 179?
Businesses that purchase, finance, or lease a qualifying new or pre-owned vehicle during the current tax year and place that vehicle into service between January 1, 2024, and December 31, 2024, can claim the deduction on their 2024 tax return. The vehicle must be used primarily for business use at least 50 percent of the time, and there is a total spending cap of 4,270,000 on business equipment, including vehicles.
What Are the Section 179 Deduction Limits for 2024?
The total deduction limits typically change each year. For 2024, the Section 179 maximum deduction limit has been raised to $1,220,000. However, a business that spends more than $4,270,000 on business equipment is not eligible for Section 179 deductions. The deduction limit starts to phase out dollar for dollar once a business spends $3,050,000 on equipment. The spending limits ensure that small to medium businesses are the primary benefactors of Section 179 deductions.
What Is Bonus Depreciation
Bonus Depreciation is the old way the IRS let businesses deduct the cost of equipment. However, the process was through a gradual depreciation calculation over many years. Section 179 allows you to take the full purchase price for equipment in the current tax year. Bonus depreciation is currently being phased out by 20 percent each year until sunset in 2026. Bonus depreciation is set for 60 percent this year on top of Section 179. Next year, bonus depreciation will be 40 percent.
Which Vehicles Are Eligible for Section 179 Deductions
Nearly all vehicles that are used for business purposes can qualify for a full or partial deduction, depending on the type of vehicle. This year, SUVs like the Mercedes-Benz GLS are capped at $30,500. However, vehicles that weigh more than 14,000 pounds or are designed for specific work purposes qualify for the full purchase price. If you purchase a business-use vehicle at Mercedes-Benz of Lancaster, be sure to place it into service before December 31st to qualify for the deduction.
What Do I Need to Know About Section 179?
Section 179 allows businesses to save on equipment and upgrades for their operations. With a Section 179 deduction, you can deduct the full purchase price and reduce the business' tax burden. Here are some important things to know:
- Businesses qualify for Section 179 if they spend less than a total $4,270,000 on equipment
- Businesses may not deduct more than $1,220,000 in 2024
- New and pre-owned vehicles qualify for Section 179 deductions
- There is a deduction cap of $30,500 on SUVs weighing between 6,000 and 14,000 pounds, such as:
- Mercedes-Benz GLS 580 4MATIC
- Mercedes-Benz GLS 600 4MATIC
- Mercedes-Benz G 550 4x4 Squared
- Mercedes-Benz GLS 580 4MATIC
- Mercedes-Benz GLS 600 4MATIC
- Mercedes-Benz AMG G 63 4MATIC SUV
Contact the Finance Center at Mercedes-Benz of Lancaster for More About Section 179 Deductions
Get the vehicles you need now with Section 179 deductions. Mercedes-Benz of Lancaster has new and pre-owned Mercedes-Benz SUVs and Sprinter vans to enhance your business capacity and improve your bottom line. Shop now and ask our experts for more information about qualifying vehicles.
Always consult your tax preparation experts about Section 179 deductions and tax impacts on your business.
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