2024 Tax Changes: 5 Key Updates for Equipment-Dependent Companies
Now is a great time to revisit your 2024 tax strategy – especially if your business relies on equipment to stay competitive and productive. To simplify things, we’ve outlined some of the latest tax changes, new incentives, and ways to maximize deductions this year.
1.
Higher Limits on Section 179 Deductions
- Section 179 allows you to deduct the total cost of qualifying new or used equipment immediately instead of spreading it out over several years. For 2024, the maximum deduction increased to $1,220,000, with a total capital purchase cap of $3,050,000. Small and midsize businesses can use this increase to keep pace with growing demand by adding or upgrading equipment. Remember, the deduction applies to eligible equipment placed in service by the end of the year. Financing options qualify, too - allowing businesses to take the deduction now and pay for the equipment over time.
2.
Bonus Depreciation Phase-Down
- For the past few years, businesses could use 100% bonus depreciation to immediately deduct the cost of eligible assets. But starting in 2024, this benefit is phasing down. Businesses can now deduct 80% of equipment costs upfront. The remaining 20% will be depreciated over the asset’s useful life. Even though it’s a reduction, bonus depreciation remains a valuable incentive. To find the right mix of Section 179 and bonus depreciation for your equipment investments, it’s a good idea to consult with a tax advisor.
3.
Green Tax Incentives for Energy-Efficient Equipment
- New federal and state tax credits are rewarding businesses that prioritize eco-friendly equipment. If your business is in an industry such as construction, manufacturing, or waste management, you may qualify for up to 30% in credits on eligible green equipment. Some states offer faster depreciation for green assets, which can mean quicker tax savings on eco-friendly choices. Exploring these incentives might reveal substantial savings while also helping you stay ahead of sustainability trends.
4.
Adjustment to Interest Deduction Limits
- Many businesses depend on financing for their equipment purchases. In 2024, some changes to the interest deduction cap could impact tax planning. Adjusted taxable income for interest deductions will now exclude depreciation and amortization, which might lower the deductible amount. Businesses with financed equipment should review their financing structures to maximize these deductions. Talking with a tax advisor can help you make the most of the new limits.
5.
State-Level Incentives for Equipment-Heavy Businesses
- In 2024, many states increased tax breaks for equipment-intensive industries to encourage economic growth. States are offering varied incentives, like sales tax exemptions on machinery, investment credits, and property tax breaks. Knowing your state’s programs could help you plan equipment purchases, especially if you’re expanding.
Key Takeaways:
These 2024 tax updates outline potential tax savings, so review them now and leverage year-end opportunities. Section 179 and bonus depreciation continue to be important, and new green incentives, along with state-level tax breaks, can help reduce your tax burden even further. At Jupiter Equipment Finance, we can assist you in capitalizing on these opportunities with financing options that support your growth. Contact us today to learn how we can help you achieve your financing goals in 2024 and beyond.
** Please note this article is not intended to provide tax advice, and all specific tax inquiries and business-related decisions should be made with a trusted tax advisor.
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