Introduction

The end of the year often brings a rush of decisions for businesses looking to close out their fiscal periods on a high note. One crucial choice many companies make is whether to invest in new equipment. The IRS Section 179 tax deduction provides a significant incentive for businesses to make these investments, offering substantial savings. What makes this program even more appealing is that it allows businesses to deduct the full purchase price of qualifying equipment—whether purchased or financed—within the same tax year.

At Compressed Air Advisors Online, we offer the option to finance your equipment and take full advantage of the Section 179 deduction. If you haven’t yet explored how Section 179 can benefit your business, now is the time to act. As the year draws to a close, the deadline to take advantage of these savings looms nearer. This article will walk you through the ins and outs of Section 179, its benefits, and why it’s especially important to take advantage before December 31st.

Table of Contents

1. What is Section 179?
2. Why You Should Act Before Year-End
3. Benefits of Financing Equipment with Section 179
4. How Much Can You Save?
5. Why Section 179 is Popular at Year-End
6. Getting Started with Section 179
7. Conclusion: Don’t Miss Out on 2024 Tax Savings

What is Section 179?

Section 179 is a part of the IRS tax code designed to incentivize businesses to invest in new equipment and software by allowing them to deduct the entire cost of the purchase or financing in the year the equipment is put into service. This provision is designed specifically for small and medium-sized businesses, giving them a significant tax break on essential equipment.

"Under Section 179, businesses can deduct up to $1.16 million in 2024 for qualified equipment purchased or financed." - IRS

The program covers a broad spectrum of equipment types, including:

• Machinery (such as air compressors, which are essential for many industrial businesses)
• Office furniture
• Business vehicles
• Off-the-shelf software

Importantly, Section 179 allows businesses to deduct the full purchase price, even when the equipment is financed. This means that, even if you’re paying for the equipment over time, you can still deduct 100% of the cost in the current tax year.

At Compressed Air Advisors Online, we offer financing solutions to help your business maximize the benefits of Section 179 while keeping your capital intact.

Why You Should Act Before Year-End

Time is of the essence when it comes to Section 179. The equipment must be purchased and put into service by December 31st to qualify for the deduction in the 2024 tax year. Waiting until next year will push your tax savings into 2025, meaning you’ll miss out on the immediate benefits.

Here’s why acting now is crucial:

1. Deadline Pressure: The tax deduction applies only to equipment acquired and operational by the end of the year. If you miss this deadline, you lose out on claiming the deduction for 2024.

2. Tax Planning: Deductions like Section 179 are often used as part of year-end tax planning. Businesses looking to reduce their taxable income in 2024 can make strategic purchases in the final quarter of the year to maximize their savings.

3. Cash Flow Benefits: Financing equipment in Q4 and deducting the full price this tax year means you’ll benefit from immediate tax savings, improving your cash flow as you head into 2025.

Many companies find themselves rushing to close purchases in December to meet the IRS deadline. As a business owner, this program presents a valuable opportunity to invest in the future while gaining financial advantages in the present.

Benefits of Financing Equipment with Section 179

Financing equipment provides flexibility to businesses, allowing them to spread payments over time while still enjoying the full tax benefits of Section 179. Here’s why this is a game-changer:

1. Immediate Deduction, Delayed Payment: Even if you finance the equipment, you can still deduct the full purchase price in the current tax year. This is particularly advantageous because it allows you to enjoy the tax benefits upfront while spreading the actual cost over time.

2. Improved Cash Flow: Financing equipment instead of paying upfront means you can keep your working capital available for other needs. Your business can maintain its liquidity while taking advantage of the full tax deduction.

3. Flexible Equipment Choices: Section 179 covers a wide range of equipment. From compressors, industrial tools, and technology, businesses have the freedom to finance a variety of essential equipment without worrying about losing out on the tax deduction.

Visit our financing page to learn more about how you can finance your equipment and maximize your Section 179 benefits.

How Much Can You Save?

Let’s break down the potential tax savings from Section 179:

• Deduction Limit: In 2024, businesses can deduct up to $1.16 million in qualifying equipment.
• Phase-Out Threshold: There’s a dollar-for-dollar phase-out when your total equipment purchases exceed $2.89 million.

Example:

If your business finances an air compressor worth $50,000 and qualifies for the Section 179 deduction, here’s how it could impact your bottom line:

• Equipment Cost: $50,000
• Section 179 Deduction: $50,000 (you deduct the full amount)
• Assumed Tax Rate: 30%
• Tax Savings: $50,000 x 30% = $15,000 saved

The actual cost of the equipment, after factoring in your tax savings, would be reduced to just $35,000.

By using this program, your business reaps the financial benefits now, which helps offset the cost of equipment and supports your business growth in the coming year.

Why Section 179 is Popular at Year-End

Year-end is the most popular time for businesses to take advantage of Section 179, and for good reason. Here’s why:

1. Tax Planning Needs: Many businesses, particularly small and medium-sized companies, focus on lowering their taxable income at the end of the year. Section 179 allows for this by offering immediate, substantial deductions.

2. Capital Investments for the New Year: Companies often invest in new equipment at the end of the year to ensure they are prepared for growth in the upcoming year. Section 179 sweetens this deal by providing the full deduction upfront, allowing businesses to offset their taxable income while gearing up for the next year’s operations.

3. Urgency: The deadline creates a sense of urgency for businesses looking to improve cash flow and maximize their tax savings. Equipment financing companies also see a surge in demand during this period, with businesses rushing to finalize deals.

Many companies look at their year-end profits and decide to reinvest in their operations, knowing that Section 179 will offer them considerable tax relief.

Getting Started with Section 179

Taking advantage of Section 179 is easier than you might think. Here’s how to get started:

1. Review Your Needs: Assess your business equipment needs and determine which purchases could qualify for the Section 179 deduction. Remember, the equipment must be placed in service by December 31st.

2. Finance Your Equipment: Consider financing your equipment purchases. Financing allows you to benefit from Section 179’s tax deductions while keeping your capital intact.

3. Contact Compressed Air Advisors: Our team at Compressed Air Advisors Online is here to help you navigate the financing and purchasing process. We offer a wide range of industrial air compressors and equipment that qualify for Section 179.

4. File the Necessary Forms: Work with your accountant or tax advisor to ensure you file the proper forms with the IRS. Section 179 is claimed on IRS Form 4562, which should be submitted with your tax return.

Conclusion: Don’t Miss Out on 2024 Tax Savings

The Section 179 tax deduction is a powerful tool for businesses, allowing them to deduct the full cost of qualifying equipment while improving cash flow. However, time is running out to take advantage of this benefit for 2024.

Whether you're purchasing or financing equipment, Section 179 can offer immediate savings. At Compressed Air Advisors Online, we can guide you through the financing process, ensuring your business maximizes its tax benefits.

Don’t let the deadline pass without securing your deduction. Contact us today to learn more about how we can help you take advantage of Section 179 before the end of the year.