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Maximize Tax Savings with Section 179: Now’s the Time to Buy Vehicles & Equipment

October 17, 2024

As the year winds down, many business owners are looking for smart ways to reduce their taxes while investing in their operations. One of the best strategies? Leveraging Section 179 of the IRS tax code to deduct the full purchase price of qualifying business vehicles and equipment before the year ends.

What is Section 179?

Section 179 allows businesses to deduct the cost of certain equipment or vehicles in the year they are purchased, rather than spreading out the deductions over time. But there’s a deadline—you need to make your purchases before December 31 to qualify. Here’s why Q4 is the perfect time to invest.

Immediate Tax Deduction

With Section 179, a business may deduct the cost of qualifying vehicles and equipment, up to a $1,160,000 limit in 2024. There’s a spending cap of $4,050,000, and SUVs, trucks, and vans between 6,000 and 14,000 pounds have a specific deduction limit of $28,900.

Improve Business Efficiency

Upgrading your fleet or equipment isn’t just a tax move—it’s a business strategy. Newer vehicles often offer better fuel efficiency, safety, and reliability. If you’ve been spending too much on repairs for outdated equipment or vehicles, this is an opportunity to modernize and cut long-term operational costs.

Bonus Depreciation

In addition to Section 179, you may benefit from bonus depreciation, which allows you to write off 80% of an asset’s cost in the first year it’s put into service. If you exceed Section 179’s deduction limits, bonus depreciation offers additional savings, but the rate will drop next year.

Year-End Deals and Financing

As the year ends, dealerships often offer promotions on current models, making it a great time to buy vehicles. Many financing options are available, allowing you to spread out payments while still benefiting from a tax deduction on the full purchase price.

To claim the Section 179 tax deduction for 2024, your vehicles or equipment must be purchased, financed, or leased and in use by December 31, 2024. Missing the deadline could mean missing out on these valuable tax benefits for the 2024 tax year.

Upgrading your business vehicles and equipment with Section 179 may not only reduce your tax burden but help improve your operations. If your fleet needs an upgrade, act now and explore financing options at Redwood Credit Union and fleet procurement at RCU Auto Services.*

Redwood Credit Union offers flexible financing for business vehicles and equipment. Learn more.

Always consult a tax professional to confirm eligibility for Section 179 deductions.

*RCU Auto Services is a wholly owned subsidiary of Redwood Credit Union.