If you bought construction equipment in 2020 or plan on buying used equipment over the next two years, you’re in for a nice tax break. Contractors are not only able to receive a tax break for new construction equipment purchases, but they can also receive a tax break for used construction equipment purchases.
How the Tax Law Works
When the new tax code was signed into law in December 2017, many construction business owners were excited about several changes appearing in Section 179. Some of the highlights include:
- A first-year bonus equipment deduction that includes, for the first time, used construction equipment.
- A first-year bonus equipment deduction that increased from “50 percent to 100 percent of its cost.” The result of this change is it allows buyers to write off the entire cost of the machine the first year they purchase it instead of deducting the cost in increments over several years.
- An increase in the maximum equipment depreciation deduction allowance – from $500,000 to $1 million.
- An increase in the maximum equipment purchase allotment – from $2 million to $2.5 million.
Who is Eligible for Equipment Deductions?
According to Section 179.org, those who qualify for the deduction include “all businesses that purchased, financed, and/or leased new or used business equipment during the 2020 tax year. This assumes they spent less than $3,500,000.
What type of Equipment can you Write off?
- All construction equipment or heavy machinery purchased for business use
- Business vehicles (weight must exceed 6,000 lbs.)
- Certain improvements made to business buildings (for example, security systems, HVAC, and roofing).
- And more. Visit section179.org for more details
Important Note: Some states, like California, handle bonus depreciation differently. You’ll want to consult with your tax accountant first to make sure you qualify before making a big purchase.
Looking to Buy Used Construction Equipment?
Headquartered in Southwest Iowa, Duke Rentals is locally owned and operated, supplying the Midwest with an extensive fleet of over 9000 machines. We provide rentals and sales of scissor lifts, boom lifts, telehandlers, industrial forklifts, light, and general dirt equipment. Whether you're a contractor, a homeowner, or anything in between, we've got the equipment you need to get the job done quickly and safely.