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Year End Tax Savings

Maximize Your Tax Savings Before Year-End: How Buying Equipment Can Benefit Your Business Under Section 179

As the year draws to a close, many business owners are looking for ways to reduce their taxable income and increase cash flow. One of the best strategies to achieve this is by taking advantage of Section 179 of the IRS tax code. If you're in the market for new farm equipment, construction machinery, or other types of business equipment, buying before the end of the year can offer significant tax savings and help your business stay competitive in the year ahead.

At Dragoons Farm Equipment, we want to make sure you're not only getting the best equipment for your needs but also maximizing your financial benefits. Here’s how purchasing equipment before December 31 can help you leverage Section 179 and save money on your taxes.

What is Section 179?

Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year, rather than depreciating it over several years. This deduction is designed to encourage businesses to invest in themselves and grow.

For the 2023 tax year, the deduction limit for Section 179 is $1,160,000. That means you can write off up to $1.16 million in new or used equipment in the same year you purchase it—an incredibly valuable opportunity for businesses looking to make a major investment in their operations.

Why You Should Buy Equipment Before the End of the Year

  1. Immediate Tax SavingsBy purchasing equipment now, you can take advantage of the Section 179 deduction on your 2023 tax return. Depending on your tax bracket and the amount of equipment you purchase, this could result in significant savings, potentially reducing your tax liability by thousands of dollars. For businesses that plan ahead, the end of the year is the perfect time to make those big purchases.
  2. Up to $1.16 Million DeductionWith the Section 179 deduction limit for 2023 set at $1.16 million, there’s a substantial opportunity to write off the full cost of your equipment purchase, depending on your business’s total investment. This means you don’t have to wait years to get the full benefit of your purchase—it’s immediate, helping to improve cash flow for the year ahead.
  3. Bonus DepreciationIn addition to Section 179, bonus depreciation allows businesses to deduct 80% of the cost of new and used equipment that qualifies for Section 179, making it even more advantageous to purchase before year-end. The bonus depreciation rate is scheduled to gradually phase down in the coming years, so buying in 2023 can help you maximize savings before it decreases.
  4. Upgrade Your Fleet or EquipmentFor farmers, contractors, and other business owners, upgrading equipment is often necessary to stay competitive. Whether you’re replacing an outdated tractor, upgrading to a more efficient piece of machinery, or adding a new vehicle to your fleet, doing so before the end of the year not only boosts your productivity but also unlocks immediate tax savings.
  5. Accelerate Your InvestmentIf you’re planning to upgrade or expand your equipment in the near future, doing so sooner rather than later allows you to leverage these savings now rather than waiting. This can help you invest back into your business, whether it’s through increased inventory, larger production capacity, or even reinvestment in other areas of your operation.

Qualifying Equipment for Section 179

Not all purchases are eligible for Section 179 deductions, so it’s important to know what qualifies. Fortunately, most tangible business equipment used for business purposes, including the following types of equipment, typically qualify for Section 179:

  • Farm Equipment: Tractors, plows, harvesters, planters, and other machinery.
  • Construction Equipment: Excavators, bulldozers, backhoes, and other heavy machinery.
  • Vehicles: Pickup trucks and SUVs with a gross weight over 6,000 lbs.
  • Tools and Machinery: Large tools and specialized equipment used in your business.
  • Office Equipment: Computers, printers, copiers, and other office technology.

It’s important to verify with your tax advisor that the equipment you’re purchasing qualifies for the deduction, as there are specific rules and limits depending on the type of property and its use.

Plan Ahead and Act Before December 31

To fully benefit from the Section 179 deduction, your equipment purchase must be made and put into service by December 31 of the current tax year. This means that if you're considering upgrading your equipment or adding new machinery, you need to act quickly.

At Dragoons Farm Equipment, we offer a wide range of new and used farm machinery and construction equipment designed to meet your needs. Our team is here to help guide you through the purchasing process and ensure that you are making an investment that will benefit your business for years to come.

A Few Tips for Maximizing Your Section 179 Benefits:

  • Consult with a Tax Professional: While Section 179 can provide significant tax savings, it's important to consult with your accountant or tax advisor to make sure you qualify and to maximize your savings.
  • Buy and Use the Equipment Before Year-End: The equipment must be placed in service by December 31, so make sure your purchase is finalized before the year ends.
  • Consider Your Cash Flow: While Section 179 can offer immediate tax relief, make sure that your business is ready for the financial commitment of purchasing new equipment.
  • Check the Limits: Be aware that the Section 179 deduction limit begins to phase out if you purchase more than $2.89 million in equipment in a given year, so plan accordingly.

Conclusion

Purchasing equipment before the end of the year can significantly benefit your business—both operationally and financially. With Section 179, you can deduct the full cost of qualifying equipment from your taxable income, potentially saving your business thousands of dollars in taxes.

If you’re looking for quality farm equipment or machinery to take advantage of these tax savings, Dragoons Farm Equipment has a wide selection of reliable, durable equipment to meet your needs. Don’t wait—shop today to ensure you’re ready for 2024 with the tools and savings you need to succeed!

To browse our inventory, visit Dragoons Farm Equipment.

Disclaimer: Always consult a tax advisor to ensure you meet all criteria for Section 179 deductions. Tax laws and regulations can change, and your accountant will be able to guide you on how to best leverage these incentives for your business.

Do you derive more than two-thirds of their gross income from farming?

Governor Hochul’s Investment Tax Credit (ITC) program might be a better program! Learn more: https://www.farmcrediteast.com/resources/todays-harvest-Blog/230530NewYorkFarmersRefundableInvestmentTaxCredit

Contact our sales team for details!

Dan@Dragoonsfarmequipment.com

Ryan@Dragoonsfarmequipment.com

518-236-7110

Locally owned & operated since 1953
Welcome to

Dragoon’s Farm Equipment

Since 1953 Dragoon's Farm Equipment has supplied parts and whole goods in the farm equipment, lawn equipment, and garden equipment to farmers and homeowners. We maintain an expert service shop for every line we sell. We support the equipment we sell with factory-trained service technicians and a robust parts department. We are committed to offer you quality products at competitive prices with the best financing option. We proudly serve New York and Vermont as a locally owned and operated business.