Leveraging Section 179 vs. Bonus Depreciation: Which Saves Your Roofing or HVAC Business More?
“Should I Use Section 179 or Bonus Depreciation to Buy Equipment?”
Hey Mareaka, I’m looking to upgrade some equipment for my HVAC business before the end of the year. I’ve heard about Section 179 and Bonus Depreciation, but I’m not sure which one is better for my tax situation. What should I do?
You’re not alone—this is a question many roofing and HVAC business owners ask as they plan end-of-year purchases. Making the right decision could mean thousands in tax savings, while choosing the wrong path might leave money on the table.
What’s at Stake? (Why This Matters)
If you’re investing in new equipment, trucks, or tools, you want to maximize your tax benefits. But picking between Section 179 and Bonus Depreciation isn’t always straightforward.
- Choose wrong, and you might reduce deductions you could use later.
- Miss the deadline, and you could lose out on major savings.
- Use them correctly, and you can lower your taxable income significantly—keeping more cash in your business.
So, let’s break it down.
How Section 179 Works (Fast Deductions for Smaller Purchases)
Section 179 lets you immediately deduct the full cost of qualifying equipment in the year you purchase it—rather than spreading it out over time.
Best for: Contractors buying equipment they plan to use long-term but want an upfront tax break.
- Max deduction: $1.22 million (2024 limit)
- Phase-out limit: If your total equipment purchases exceed $3.05 million, Section 179 starts phasing out.
- Key rule: The equipment must be in use before year-end to qualify.
Example: You buy a $75,000 HVAC service van in November 2024. With Section 179, you can write off the full $75K instead of depreciating it over several years.
How Bonus Depreciation Works (Big Deductions, But Less Flexibility)
Bonus Depreciation allows you to immediately deduct a percentage of eligible assets, even if your total purchases exceed Section 179 limits.
Best for: Larger equipment purchases or businesses exceeding the Section 179 cap.
- Current deduction rate: 60% in 2024 (phasing down from 100% in 2022)
- No spending cap: Unlike Section 179, there’s no phase-out threshold.
- Can create a business loss: If the deduction is larger than your income, you may carry the excess forward.
Example: You purchase $500,000 worth of roofing machinery in December 2024. If you exceed the Section 179 limit, you can still take 60% ($300,000) as Bonus Depreciation in the first year.
Which One Should You Use? (Choosing the Best Strategy)
Here’s a simple way to decide:
- If you want more control over your deductions: Use Section 179—you can pick which assets to deduct now vs. later.
- If you’re buying big-ticket items over $1.22M: Use Bonus Depreciation—there’s no cap, and you can still get a large upfront deduction.
- If you’re expecting higher future income: Consider spreading out deductions instead of taking them all at once.
- If your business will have a loss this year: Bonus Depreciation might not be useful now—but could help offset future profits.
How a Roofer Used This to His Advantage
Jake, a roofing contractor, needed to upgrade his fleet before taking on larger projects. He purchased $250,000 worth of trucks and equipment.
- He used Section 179 to deduct $100,000 upfront while preserving deductions for future years.
- He applied Bonus Depreciation to the remaining $150,000, maximizing his write-offs without reducing future tax flexibility.
By using both methods strategically, he lowered his taxable income from $500,000 to $250,000, reducing his tax liability by approximately $75,000, while keeping options open for future tax planning.
What’s Your Next Move? (Take Action Now)
Timing is everything. If you’re considering buying new equipment, here’s what you should do:
- Talk to your accountant before making large purchases—they can help you pick the right strategy.
- Make sure your equipment is in service before December 31 to qualify for 2024 deductions.
- Download my free HVAC/Roofing Tax Deduction Checklist to ensure you’re not missing any opportunities.
Need personalized guidance? Let’s chat. Schedule a free 30-minute consultation to see how you can maximize your tax savings this year!
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