equipment deduction
The Section 179 deduction limit for 2018 was raised to $1 million with a total equipment purchase cap of $2.5
million. This is a significant increase from the 2017 Section 179 tax deduction, which was set at a $500,000 limit
with a threshold of $2.5 million. Once the $2.5 million limit is reached, the deduction decreases on a dollar-for- dollar
basis and expires when $3.5 million worth of equipment is purchased, making it a true incentive for small and
medium-size businesses, including farms.
The new tax law also increased first-year bonus depreciation to 100 percent and expanded qualified property to
include both new and used equipment purchases. Bonus depreciation was previously set at 50 percent between
2015 and 2017 and included only new assets.
The 100 percent bonus depreciation amount will remain in effect until the end of 2022 when the following
phase-down will occur:
• 80 percent for property placed in service after Dec. 31, 2022, and before Jan. 1, 2024.
• 60 percent for property placed in service after Dec. 31, 2023, and before Jan. 1, 2025.
• 40 percent for property placed in service after Dec. 31, 2024, and before Jan. 1, 2026.
• 20 percent for property placed in service after Dec. 31, 2025, and before Jan. 1, 2027.
In addition to equipment purchases, other eligible items may include "off-the-shelf" computer software, breeding
livestock and single-purpose structures such as milking parlors. Before making any large capital purchases, it's
a good idea to consult with an accountant or another professional tax advisor to ensure deductions are claimed
according to the Section 179 code.
For more information about the Section 179 depreciation update for 2018 visit: http://www.section179.org
Farmers making equipment purchase decisions this year may be able to take
advantage of substantial tax savings under the Section 179 updates outlined in the
reformed tax code.
Equipment Deduction
Raised to $1 million
Section 179 Depreciation Updates for 2018
*Article courtesy of our friends at AgDirect originally published 2-27-2018.
3 Northwest Farm Credit Services
"These improved tax incentives could allow farmers to immediately
write off capital investments, such as a new combine or tractor,
and keep thousands of dollars in their bottom line. During
tight market periods, this can make a big difference
when it comes to making purchase decisions."
Chad Goldsmith • AgDirect Territory Manager
