• 11/11/2022
  • By Doosan Infracore North America LLC
Fourth quarter heavy equipment purchases, such as the Doosan DD100 Dozer depicted, can save you money. Read this blog to learn more about equipment tax deductions.

Learn how year-end equipment purchases could benefit your bottom line. Looking for the perfect gift for everyone on your list this holiday season? Don’t forget to think about your business, too.

 

What equipment can I write off on my taxes?

Year-end heavy equipment purchases can be a smart move for U.S.-based businesses looking to lighten tax loads and gear up for the year ahead.

That’s because the IRS tax code allows companies — including those in construction, forestry, mining or recycling — a business equipment tax deduction equal to the price of qualifying equipment purchases in a given tax year. It’s spelled out in Section 179, says Greg Winchester, vice president North America of Doosan Financial Solutions.

“Customers typically buy more aggressively at the end of the year,” Greg says. “And that's primarily because of Section 179.”

None of the following should be taken as legal or tax advice, as each business’s situation differs and tax code details change year to year. Exploring Section 179 with your tax advisor could lead to a big heavy equipment tax deduction on a year-end purchase of your next excavator, wheel loader, ADT, log loader or material handler.

Here’s an overview of Section 179, according to Section179.org, a resource Greg recommends for those looking to learn more.

 

Heavy Equipment Tax Deduction: The Basics

Section 179 allows a business to claim a tax writeoff for equipment purchases on the entire price of a qualifying machine for the current tax year. That’s quite different from write-offs for depreciation, in which a business writes off a machine’s price little by little over several years. Ask your tax advisor how your construction equipment’s depreciation life can help lower taxes.

With Section 179, most small businesses can write off all qualifying equipment up to a specified cap. But that can change from year to year, Greg notes. For example, the cap, which was $1,000,000 in 2019, rose to $1,040,000 for the 2020 tax year. Info for the current year is detailed at Section179.org.

In addition, the deduction — intended for small to mid-sized businesses — is reduced once a business hits a certain total for equipment purchased ($2,590,000 in 2020). The deduction disappears entirely once a business spends $3,630,000.

“You can purchase new or used equipment needed now and finance it during this [following] tax year,” Greg says.

 

What equipment can I write off on my taxes?

Section 179 applies to American businesses purchasing physical goods. That includes vehicles and machines used for business purposes more than 50% of the time — like when you purchase heavy equipment.

Construction tax deductions are an invaluable financial tool. New or used qualifying equipment that is financed, purchased or leased should all be eligible, as long as the equipment is put to work within a given timeframe. For 2022, that timeframe is simply the calendar year — from January 1, 2022, to December 31, 2022.

The specific details for Section 179 can change from one year to the next, Greg notes.

“It’s best to contact your tax advisor to confirm the benefits for your company before purchasing equipment under this government incentive,” he says.

For businesses in construction, forestry, mining or recycling, buying before New Year’s Day could make a big difference in their bottom line. Contact your tax advisor to see how Section 179 could work for you.

Ready to purchase? Find your local Doosan dealer for the most reliable equipment on the market.

 

Ready To Really Dive In on Tax Benefits? Get Our Q&A

Financial advisor Garry Bartecki and tax experts Jim Margner and Steven Pierson discuss heavy equipment tax deductions and how you can know your business better in an in-depth Q&A. Get the tax tips.