A 2024 Guide to Section 179 for Tile Installation Business Owners

Tax season can be stressful, but it’s also an opportunity to maximize your savings and reinvest in your tile installation business. The Section 179 deduction is a powerful tax tool that allows you to deduct the full purchase price of qualifying equipment and software. For 2024, the rules and limits have been updated, making it essential to stay informed and plan strategically.

Here’s everything you need to know about Section 179 in 2024 and how it can benefit your tile business.

What Is Section 179?

Definition

Section 179 is an expense deduction under the Internal Revenue Code (IRC) that allows businesses to deduct the full purchase price of qualifying depreciable assets purchased or financed during the tax year.

For 2024, the maximum deduction limit is $1,220,000, up from $1,160,000 in 2023. The deduction is available for new and used equipment, provided it is put into service by December 31, 2024.

Purpose

The goal of Section 179 is to encourage small and medium-sized businesses to invest in their operations. By enabling businesses to deduct the cost of equipment and upgrades upfront, Section 179 helps offset the expenses of growing and maintaining a business.

How Does Section 179 Work?

In the past, businesses could only deduct equipment costs incrementally over several years through depreciation. For example, a $50,000 tile saw might be depreciated $10,000 annually for five years.

With Section 179, businesses can write off the entire $50,000 in the year it’s purchased and placed into service. This immediate deduction simplifies tax filing and provides substantial upfront savings.

Who Can Use Section 179?

Eligible Businesses

Section 179 benefits a wide range of businesses, including:

• Tile installation companies
• Construction firms
• Contractors and small business owners
• Companies purchasing or upgrading machinery, vehicles, or software

Timeline

The deduction applies to qualifying purchases made during the 2024 calendar year, as long as the equipment is placed into service by December 31, 2024.

What Equipment Qualifies for Section 179?

For tile installers, here are some examples of qualifying equipment:

• Tools and Machinery: Tile saws, mixers, tile cutters
• Business Vehicles: Vans, trucks, and SUVs used for business purposes (maximum deduction of $30,500 for SUVs in 2024)
• Technology: Project management software, computers, and office equipment
• Office Furniture: Desks, chairs, and storage solutions

Key Rule: The equipment must be used for business purposes more than 50% of the time.

2024 Section 179 Limits

• Maximum Deduction: $1,220,000
• Phase-Out Threshold: $3,050,000
  • Once your equipment purchases exceed $3,050,000, the deduction begins to phase out dollar-for-dollar and is completely eliminated at $4,270,000.

How Does Section 179 Differ from Bonus Depreciation?

While Section 179 and bonus depreciation both allow for upfront deductions, they work differently:

Most businesses use Section 179 first, up to its limit, then apply bonus depreciation to additional purchases.

Real-World Example for Tile Installers

Let’s say your tile installation business spends $2,000,000 on equipment in 2024.

1. Section 179 Deduction:

   • Deduct the first $1,220,000.

2. Bonus Depreciation (60%):

   • Deduct 60% of the remaining $780,000, which is $468,000.

3. Total First-Year Deduction:

   • $1,220,000 (Section 179) + $468,000 (Bonus Depreciation) = $1,688,000.

Tax Savings:

Assuming a corporate tax rate of 21%, you’d save $354,480 in taxes and reduce the effective cost of your equipment to $1,645,520.

How to Take the Deduction

1. File Form 4562:

   • Use IRS Form 4562, Depreciation and Amortization, to claim the Section 179 deduction.

2. Attach to Tax Return:

   • Submit the completed form with your tax return.

3. Consult a Tax Professional:

   • Tax rules can be complex, and a professional can help you maximize your deductions.

Maximizing Your Tax Savings in 2024

1. Plan Equipment Purchases: If you’re planning major investments, make them before December 31, 2024, to qualify for this year’s deduction.
2. Prioritize Section 179: Use Section 179 first for the highest immediate savings, and apply bonus depreciation as needed.
3. Check Qualifying Items: Ensure the equipment meets IRS requirements.
4. Keep Records: Maintain detailed documentation of purchases, usage, and service dates.

Don’t Miss Out on Section 179 Benefits

Section 179 can provide substantial financial relief, allowing you to reinvest in your tile installation business. Whether you need new tools, upgraded vehicles, or software to streamline operations, this deduction can significantly reduce your tax burden.

Ready to take advantage of Section 179?

Start planning your purchases today, and consult your tax professional to ensure you get the maximum benefit from this powerful deduction.

Need help choosing equipment? Explore our recommended tools designed to take your tile business to the next level.