Almost every farmer’s least favorite piece of equipment is their calculator. We know that you would rather be out working on the land than sitting at your dining room table crunching numbers, so we have made it our goal to help you take care of the financials as much as we can.
Whether you are trying to calculate a loan or lease, looking for answers to financial questions, or simply need to access the tools available to you as part of your MyJohnDeere account, John Deere has the financial resources to help you make sense of the math.
Tax Deductions for Equipment Purchases
Good news: The IRS allows for tax advantages on the purchase of new and used equipment.
Even better news: There is more than one advantage! In fact, there are two key tax benefits that you will want to keep in your back pocket for when tax season rolls around.
Section 179 Deduction
How does an immediate tax break after the purchase of new equipment sound? Good, right?
The first key tax benefit for equipment owners is Section 179 of the U.S. internal revenue code. Section 179 provides the allowable deduction limit of $1,000,000 on the cost of new and used capital equipment purchased with an investment cap of $2,500,000.
No one loves depreciation, but everyone loves a bonus.
The second tax advantage is Bonus Depreciation. Bonus Depreciation can be combined with the Section 179 deduction for additional savings. It enables you to take additional depreciation on new and used (new to you) capital equipment purchases.
Bonus depreciation is currently scheduled to phase out over the next 10 years. Equipment placed in service September 2017 through December 31, 2022 has bonus depreciation of 100%. However, every year thereafter, that bonus depreciation decreases by 20%. Starting January 1, 2027, and on, there will be no bonus depreciation.
So take advantage of Bonus Depreciation while it lasts!
Tax Advantages of Equipment Deductions and Depreciation
Let’s take a glance at the tax savings introduced by Bonus Depreciation, along with Section 179.
The tax savings using Section 179 alone is $320,000. Meanwhile, the total first-year tax savings using both Section 179 and Bonus Depreciation is $480,000.
The intended purpose of this tax benefit was to stimulate the economy. The money you save in the short-term can be reinvested in capital improvements, expansion projects, and more.
So don’t wait — buy that new or used equipment today!
Disclaimer: This information is provided as a customer service by your John Deere dealer and John Deere Financial. However, it is not and should not be construed as tax advice. We strongly recommend that you consult with your tax advisor regarding how these tax-saving opportunities apply in your situation.