Maximize Year-End Tax Savings with Section 179 and Material Handling Equipment

 

Why Section 179 Matters for Your Business

As we approach year-end, many companies are reviewing capital expenditures (CapEx) and evaluating equipment purchases. Section 179 of the IRS tax code provides a powerful way for businesses to immediately expense qualifying equipment—such as pallet handling and material handling machinery—rather than depreciating it over time. This can have a dramatic impact on lowering taxable income in the current year.

What Qualifies?

Cherry’s Industrial Equipment solutions—including pallet dispensers, pallet retrievers, 90 degree tippers, pallet washers, load transfer systems and pallet inverters—qualify under Section 179 as capital equipment. To meet the requirements:

• The equipment must be purchased, financed, or leased, and placed into service by December 31 of the tax year.
• Equipment must be used more than 50% for business purposes.
• Both new and used equipment qualifies, as long as it’s new to your business.

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2025 Limits and Beyond

• In 2024, businesses can deduct up to $1.22M of equipment purchases, phasing out after $3.05M in spending.
• Beginning 2025, the One Big Beautiful Bill (OBBBA) increases the deduction to $2.5M, with a phase-out starting at $4M, and indexing for inflation in 2026.
• 100% bonus depreciation is permanent for qualifying property placed in service after January 19, 2025, providing even more flexibility when your spending exceeds Section 179 limits.

Why Timing Matters

To take advantage of Section 179 in 2024, your pallet handling equipment must be delivered and placed into service by December 31. This makes year-end planning critical—delays in orders or installation could mean missing the deduction window.

Leasing as a Capital Preservation Strategy

If CapEx dollars are not currently funded or if you want to preserve cash, leasing can be an attractive option:

• Leased equipment still qualifies for Section 179 as long as it’s placed into service before year-end.
• Leasing allows you to spread payments over time while still capturing the full deduction upfront.
• This strategy can improve cash flow, making it possible to add automation without large upfront capital commitments.

Benefits Beyond Taxes

Investing in pallet handling automation doesn’t just improve your tax position—it directly impacts your bottom line:

• Reduce labor costs and reliance on manual handling
• Improve safety, lowering workers’ compensation claims
• Increase throughput and efficiency in warehouse operations
• Enhance accuracy, reducing costly product damage or errors

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⚠️ Plan Ahead for Year-End
Production slots are filling up fast, which may extend lead times. If you already have a project in process—or are considering a new purchase—we encourage you to connect with us now. We can work with you to secure a production slot and ensure delivery before year end!

 

Final Thoughts

Section 179 provides an outstanding opportunity for businesses to lower taxable income while investing in safer, more productive warehouse solutions. Whether purchasing or leasing, Cherry’s Industrial Equipment can help you make the right equipment decisions to optimize both your operations and your tax strategy.