How to Grow Your Restaurant With Section 179 Tax Deductions In 2024

Last updated on September 29th, 2023 at 09:11 am

Do IRS Section 179 tax deductions seem mysterious or complicated? They really aren’t, we promise.

Elect to claim these deductions to claim 100% of the purchase price of eligible property during the first year it’s in service. Section 179 incentivizes business investments. It was designed to boost small businesses and the US economy by making it more affordable to make large purchases.

For business owners, that means immediate and significant savings on costly purchases. Understand the related benefits, to save thousands on restaurant equipment and other business purchases.

In this blog, we explore the inner workings of Section 179 tax deductions, how to claim them, what purchases qualify, and what to expect when claiming in 2024.

*Please note that we at Burkett are not tax professionals. Regulations on tax deductions change yearly, so be sure to consult your tax advisor about what’s best for your business.

Key Takeaways

  • This tax deduction allows you to deduct the full cost of eligible property in its first year of service, instead of over a longer period of time.
  • Inflation and other economical factors determine the limitations for Section 179.
  • You must elect on your taxes to use this code, and must be profitable to qualify.
  • Purchases must be fully operational by the end of the tax year (December 31st) to qualify.
  • Section 179 deductions allow you to purchase for profitability and longevity.

What Are Section 179 Deductions?

Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means that if you buy a piece of qualifying equipment, you can deduct the entire purchase price from your gross income.

The U.S. government developed it to encourage businesses to buy equipment more easily and invest in themselves quicker.

Section 179 allows businesses who finance their equipment purchases to write off full equipment costs in the year they buy it rather than receiving smaller annual deductions over the life of the unit.

How to Qualify

New and used equipment, software, and/or business vehicles purchased or financed during the current tax year all may qualify for this deduction.

Here are some qualifying factors to consider:

  • Business use: It takes more than just commercial kitchen equipment to run your business. To qualify as a business asset, the IRS specifies that purchased equipment must be used for business purposes at least 50% of the time.
  • Acquired by purchase: While equipment does not need to be purchased outright to qualify, it does need to be acquired by your company via an exchange of money. Gifts and inherited property will not qualify, nor will property purchased from a direct relative.
  • In Service: The IRS requires any equipment purchased to be fully operational by the end of the day on December 31 to be eligible.

Financing your equipment will allow you to pay off your equipment purchase in installments while still being able to deduct the full purchase price.*

* Terms & Conditions may vary, dependent on your specific situation.

How it Works

Infographic showing cost savings with Section 179 deductions

Let’s say you bought a $10,000 piece of equipment for your business. Under normal depreciation rules, you would only receive a portion of the cost in deductions each year over its useful life.

Now, under Section 179, you can deduct the entire $10,000 from net income in the first year you own it, as long as it’s operational by the end of the tax year.

So, assuming a 35% tax bracket, that’s a tax savings of $3,500. That savings lowers the cost of your $10,000 purchase to $6,500!

Section 179 Limits

There are limitations on both the overall amount of write-offs and the total quantity of equipment acquired under this tax deduction.

Each year, the IRS determines an appropriate cap on qualifying purchases based on the current economy and inflation. To truly make this a small business incentive, the IRS designates spending caps on equipment purchases for companies to qualify. Your Section 179 deduction will be reduced by the overage amount if your business exceeds the cap.

Work with your tax preparer to calculate your elligible purchases for deduction.

Section 179 vs. Bonus Depreciation

At the end of the tax year, business owners may ask: “Should I take the bonus depreciation or Section 179?”

To simply answer that question, you should decide based on how much you’re spending on new equipment, and the size of your business.

Bonus depreciation is a tax incentive that allows business owners to report a larger chunk of depreciation in the year the asset was purchased and in-service (restrictions apply and not all assets are eligible). Since there is no dollar limit on this tax deduction, it is advantageous for very large businesses which spend more than the Section 179 spending cap on new capital equipment.

Some experts recommend claiming Section 179 deductions to the fullest, then applying bonus depreciation to the remaining purchases.

It is important to note that tax codes change annually. Prior to 2021, bonus depreciation only covered new equipment. Now, this tax deduction includes used equipment as well.

Contact your tax advisor to ensure your deductions qualify and for guidance on business decisions.


Claiming a Section 179 deduction can provide great benefits when processing your small business taxes. Purchasing new or used equipment is costly.

Factor in available tax deductions when making large purchases, and be sure to keep records of all business purchases throughout the year.

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