Mike AndesFounder, Augusta Lawn Care and Homeworks · Founder of Homeworks and Augusta Lawn Care

The Myth of 179 Tax Deductions 🏷️

13 Feb 2025 · 1 min

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1:07

Mike Andes explains common misconceptions about Section 179 deductions for small-business owners. He argues that because of the standard deduction (stated as $29,200 for married filing jointly) and typical low profits, many small businesses receive little practical tax benefit from expensing equipment immediately; he gives example thresholds (mentions $123,500 profit and a resulting taxable income 'under $94,000' taxed at ~12%) and notes larger benefits occur only at higher income/tax-bracket levels.

Questions this video answers

$29,200

He states profit up to $123,500 (after the $29,200 standard deduction this is described as still being under $94,000) and that corresponds to about a 12% federal tax rate in his example.

Chapters

Everyone wants to say that at the end of the year they need to go buy trucks and equipment. And they do it under the guise of writing things off. When they say that they're taking a section 179, in other words, they take all the full cost of whatever that truck or piece of equipment is and they write all of it off in one year instead of taking the usual five or ten year depreciation schedule that is associated with the lifetime of that piece of equipment. The reality of the situation is that the standard deduction on Your taxes is $29,200 for a married filed jointly. So if you have a partner filing together, $29,000 right off the top is going to be reduced from your income and your take home pay. So you got to take that out of your profit. Okay? What that means is you can actually profit up to $123,500 and then take that standard deduction and still be under $94,000, which is only 12% of tax in the federal side of things. So until you start making hundreds of thousand dollars and you start getting into higher tax brackets that are in the 24, 25, 30, 35% tax bracket. Although it sounds got as a business expense and I wrote it off, in reality, most small business owners, they have such low profits that the section 179 doesn't really do much for them.