Section 179 Tax Savings

As a business owner who purchases new or used vehicles as part of your business operations, you want to get the most out of your investments. That’s why you hire an accountant to navigate your annual tax returns. One thing you can do is take advantage of Section 179 tax savings when investing in new equipment, including commercial vehicles like a new Mercedes Sprinter or Mercedes Metris van for your La Quinta deliveries or going from job site to job site.

Find out more information about Section 179 tax savings with our guide from Mercedes-Benz of Palm Springs.

What Is Section 179 Tax Savings?

Section 179 of the IRS Code allows you to deduct the full purchase price of equipment you need for your business, including vehicles, during the tax year in which it went into service. You can also use this if you lease a vehicle, too. This will go as a business expense on your income taxes, thereby reducing the amount of income that is calculated for your tax liability.

Why Is Section 179 Tax Savings Important?

The reason why Section 179 tax savings are important is because of the way the IRS Code is used to handle purchasing vehicles in Palm Desert. The old way involved deducting your vehicle’s value through depreciation over time until you took it out of service. But now, you can deduct the entire purchase price for the current tax year in which you purchase the vehicle.

For example, you buy a new vehicle for $75,000 in 2023. You can deduct that amount from your gross income on your tax return in the spring of 2024. Using the old method, if you bought a used vehicle for $50,000 in 2022 and then it was worth $40,000 in 2023, you would only be able to deduct either the $10,000 in actual value or you could deduct a certain percentage of the vehicle’s value from the original purchase price.

What Are the Section 179 Tax Savings Limits?

For 2023, companies can deduct up to $1.16 million of qualifying equipment. However, the total amount of equipment purchased must be less than $2.89 million. If you spend more than $4.05 million on new equipment, you cannot take the deduction at all. Section 179 tax savings aims to help small and medium-sized businesses compete with larger companies.

Can I Use Section 179 Tax Savings on a Mercedes-Benz Vehicle?

Yes, there are three vehicles that can help you qualify for Section 179 tax savings.

• Mercedes-Benz G-Class
• Mercedes Metris
• Mercedes Sprinter

Talk to us About Section 179 Tax Savings at Mercedes-Benz of Palm Springs

Do you have more questions about Section 179 tax savings? Contact us or call (866) 413-2555 to talk to our finance team. We’re happy to help in any way we can!