Planning for the 2023 Tax Season with Section 179

We are also not responsible for any faults with tax returns. Not qualifying for Section 179 IS NOT grounds for a refund on purchased products. All referenced numbers in this blog are subject to change without notice by the IRS.

Section 179 Explained

Section 179 is a piece of tax code that allows small to mid-sized businesses to deduct the full purchase price of eligible equipment within the year it was purchased. It was designed to provide smaller businesses with a more immediate tax benefit instead of allowing it to depreciate overtime in future tax years.

Section 179 vs. Bonus Depreciation

While both Section 179 and Bonus Depreciation allow businesses to deduct the cost of eligible equipment in the year they were purchased, there are key differences between the two.

Section 179 is limited to your amount of taxable income, which means you cannot deduct more than your business’s annual income. This piece of tax code also has a maximum write off limit for each year. Section 179’s limit for 2024 was increased to $1,220,000 with a $3,050,000 Total Equipment Purchase Limit. Once the $3.05 million threshold is exceeded, the deduction begins to decrease dollar-for-dollar until the entire deduction goes away at $4,270,000.

Bonus Depreciation is a tax incentive that is useful for businesses that spend more than Section 179’s Total Equipment Purchase Limit ($3.05 million) and allows businesses to accelerate the depreciation of eligible assets instead of writing them off over the useful life of the assets. There is no income limit with Bonus Depreciation, nor is there an annual deduction limit. For 2024, businesses can deduct 60% of the cost of eligible equipment.

It’s not uncommon to use both Section 179 and Bonus Depreciation together, however, Bonus Depreciation is typically used after the spending cap ($3.05 million) has been reached for Section 179.

Section 179 Eligible Expenses

Section 179 covers a large range of both new and used equipment. Please refer to Section179.org to view the full list of eligible equipment.

In order for the purchase to be an eligible expense, the equipment has to be new to the buyer, account for more than 50% business use, and has to be purchased and put in-use within the current tax year it is being deducted from.*

The equipment must also be acquired by the company through an exchange of money, it cannot be inherited or gifted.

*Purchased and put in-use is defined by “the moment a piece of property is ready and available for a specific use,” (i.e. if you plan to deduct any equipment in 2024, it needs to be purchased and put in-use by midnight December 31st, 2024 to qualify).

How Does this Apply to FSIP?

FSIP understands that many industrial-level machinery and battery management products are costly and begin to depreciate over time. Section 179 can help balance those up-front costs on equipment like our Xtender Battery Regenerator, Smart Discharger, and Battery Terminator.

FSIP is the exclusive North American distributor of the Xtender, an all-in-one fully automated machine for discharging, desulfating, and restoring lead-acid batteries. This unit helps to extend battery life, saving you money and reduce costly downtimes.

The Xtender can be paired with our Smart Discharger and Battery Monitoring System (BMS) to automatically provide graphical analyses of your battery’s remaining capacity, identify faulty cells, and transfers the data directly to your PC.

The Battery Terminator is an efficient and automated constant current discharger that drains lithium batteries below zero volts, eliminating the risk of thermal runaway for safe end-of-life lithium recycling.

Interested to see how these machines work? Contact our Motive Power team today to learn more!

Calculate your savings

Wondering how much you could save with Section 179? Section179.org provides you a calculator to determine what your potential savings could be.

Please remember this calculator provides estimated savings and does not guarantee your actual tax savings.