The Section 179 deduction
By Mitch Allen
These days it takes time for manufacturers to ship new orders, so if you are a contractor in need of equipment, now is the time to order it. Plus, purchase your equipment before the end of the year and take advantage of the IRS’s Section 179 tax deduction, which lets you deduct in the current year the cost of equipment purchased or financed and put into place before December 31, 2023.
And for contractors, that includes all the equipment you need to become more efficient, like excavators, dozers, backhoes, forklifts, skid steers, manlifts, etc. The only stipulation is that the equipment must qualify for the deduction. So be sure to check with your tax professional.
“It’s a good idea to become familiar with this tax incentive so you can plan for your business’s future regarding capital equipment purchases in 2023 and beyond,” says Alan Zatik, who owns ABC Equipment Rental & Sales in Brunswick and Avon, along with co-owner Jamie Terpay. “The savings can be significant.”
About Section 179 {1}
The current Section 179 deduction limit is $1,160,000, which allows you to write off equipment purchases up to that amount this year—in 2023—instead of depreciating the expense over time. In addition, the deduction now applies to used equipment. “That’s a big deal,” Alan says. “Because we’re in the rental business as well, we sell a lot of used equipment, which we professionally maintain even beyond the manufacturer’s recommendations.”
The deduction is not automatic and must be elected. To take the deduction, you’ll need to fill out IRS form 4562.
“The deduction means you get the equipment you need and enjoy significant tax savings this year,” Alan says. “It’s one reason our business is booming in the fourth quarter. Contractors start looking at their year-to-date profit and see a large tax bill on the horizon. Section 179 allows them to reduce that burden and get the equipment they need.”
Other qualifying equipment can include augers, concrete buggies, brine spreaders, diamond blades, dollies, earth moving equipment, fans, dehumidifiers, floor grinders, forklifts, generators, heaters, hydraulic tools, jacks, landscaping tools, lighting equipment, manlifts, pressure washers, saws, plow blades, welders, almost anything you need to improve safety and efficiency.
ABC sells and/or rents top-quality brands, like Kubota, Genie, JLG, Skyjack, Wacker, Solar-Tech, Towmaster, Stihl, Honda, Mustang, Gehl, and more.
ABC Equipment Rental & Sales has two locations: 29 Pearl Road in Brunswick (corner of Boston & Pearl), 330-220-4545; and at 38525 Chester Road in Avon (corner of Route 90 & Route 611), 440-934-7368. For more info visit ABCEquipment.com.
{1} Kubota Tractor Corporation, 2021. Limitations under Section 179 may apply. See a qualified tax professional for advice on your specific situation.