Understanding Section 179 Deductions

Farm financials can be confusing, especially when it comes to year-end deductions. As with any large purchase, consulting with an accountant or tax advisor to ensure claims are filed according to tax codes is recommended. Additionally, the IRS hosts Section179.org, providing the most current and correct information on all things 179. But when you’re just getting the ball rolling, sometimes it’s easier to start with your local dealer. We’ve compiled a few common questions to help you understand Section 179 options that may be available to you.

How does Section 179 deduction work?

Section 179 is one of the few government incentives available to small- and mid-sized business, offering much needed tax relief for these operations. The program is designed to take some of the bite out of large business-related purchases by allowing companies to deduct the full purchase price of qualifying equipment from their gross income. This can result in significant savings and is meant to encourage businesses to invest in the equipment they need, when they need it, rather than waiting for more favorable cashflow. It applies to equipment purchased, financed or leased from January 1 to December 31 of a given year.

What qualifies for a 179 deduction?

A lot of business-related equipment can qualify for Section 179, including vehicles, heavy equipment, office furniture, software and much more. But there are a few limitations.

- Equipment must be purchased/financed and put into service by 11:59, December 31, 2023.

- It must be used for businesses’ purposes more than 50% of the time.

- Purchases from a spouse, parent or offspring don’t qualify.

- Section 179 cannot be applied to gifts or inherited assets.

What is the maximum section 179 deduction?

The amounts change each year based on the IRS guidelines.  For the most up-to-date information, visit Section179.org or consult your tax professional.

Do tractors qualify for section 179?

Yes. As long as the tractor meets the above criteria, it can be considered for Section 179.

Does my operation qualify as a business?

For smaller producers, being recognized as a business in the eyes of the IRS is important. To qualify as farm business, two thirds of gross income must come from farming. Any less, and the operation is considered a hobby, not a business, and therefore ineligible for Section 179 deductions.

Does Section 179 apply for equipment delivered in 2024?

No. Equipment must be put in service before 11:59, December 31, to qualify for Section 179 on this year’s taxes. According to Section179.org, there are no plans to waive this requirement.

Thankfully, your local Massey Ferguson dealer has you covered. Call or stop by today to check out available equipment. From mowers to high-horsepower tractors, our dealers carry a range of equipment for any size operation.

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While there’s no avoiding taxes, small- to mid-sized operations can take advantage of Section 179 deductions to free up finances at the end of the year. Find out what Massey Ferguson models are available at the implement lot near you to close out your year in a new tractor – call your local dealer today!

AGCO Corp. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.