Beginning your fleet planning process as early in your company’s off-season as possible has several key benefits, including saving you money through the Section 179 deduction.   Let’s learn about why it is so important to not delay your fleet planning process into the new year.

Fleet Planning: Here's Why You Need to Start Now

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The first step of the fleet planning process is evaluating the state of your current fleet.  In this time, you need to ask yourself several questions in order to properly evaluate whether your fleet needs improvement for the upcoming season.  Some of these questions include:

Once assessing the current status of your fleet, you can begin to firmly understand your fleet needs for the upcoming year and can begin your fleet planning.  Ideally, fleet planning should begin immediately after your current season ends. Why?  There are several key benefits to not waiting until the new year to begin upgrading your fleet.  Some benefits include:

Section 179 Deduction

While this might seem counter-intuitive that buying a truck before the end of the year would put money back in your pocket, that is exactly what happens!

 

Section 179 of the IRS tax code allows you to deduct the full purchase price of qualifying equipment from your company’s gross income.  This deduction was created in order to benefit small businesses and encourage investments into the company. Fortunately, TMA trucks qualify for this deduction, as they are classified as “heavy construction equipment."

Purchase or Lease?

While the Section 179 Deduction can be utilized with a purchase of a new or used vehicle, its benefits can be maximized through leasing or financing equipment.  According to expert analysis of the deduction, “The primary advantage of financing equipment, vehicles, and/or software, then claiming the Section 179 Deduction, is the capability to deduct the full amount of your purchase without paying the full amount this year." If you are looking to add to your fleet, leasing/financing equipment will give you the most value by pairing it with using the Section 179 Deduction.

Limits

Of course, Section 179 Deductions do have limits.  For 2023, this deduction limit is $1,160,000. The other major stipulation with this deduction is that for it to be applied in the 2023 tax year, the equipment that is “purchased or financed must be placed into service between January 1, 2023 and December 31, 2023.”

 

There is also a spending cap set at $4,050,000 for equipment purchases this year. If your company spends more than that cap, “the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis.”

How to Use

Electing to use the Section 179 Deduction is as simple as filling out IRS form 4562 and attaching it to your company’s tax return.  To note though, you need to have complete details of the equipment purchase transaction in order to properly fill out the form.  This includes where you purchased the equipment from, the date it was purchased, and the date it was first put into service.

 

Consult this page for detailed instructions on how to take the Section 179 Deduction.

Questions

Do you still have questions about fleet planning? We understand!  By sending us an email at info@royaltruckequip.com, a member of Royal’s team will be in contact with you to answer any questions you may have or to get the process started.

 

*All Section 179 Deduction information was sourced from Section179.org.  Please consult your tax professional for how this may apply specifically to your equipment needs.

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