Take Advantage of Section 179 Tax Savings: A Guide for Dairy and Feedyard Owners

As 2024 comes to a close, MJE, LLC wants to remind our dairy and feedyard clients about the incredible tax advantages available through Section 179. Whether you’ve recently completed a project with us or are planning for 2025, this IRS deduction can help you maximize your investment in critical infrastructure and equipment.

What is Section 179?

For those unfamiliar, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year. This deduction is designed to help operations like yours save money while investing in the tools needed to grow.

To qualify, equipment must be purchased and placed into service by December 31 of the tax year.

Eligible Equipment and Improvements

Both dairy and feedyard operations rely on equipment and structures that are likely to qualify for Section 179. Examples include:

Milking Parlors and Equipment (Dairy): Improve efficiency and milk quality.
Feed Handling Systems (Dairy & Feedyard): Automate and streamline feeding operations.
Water Reclamation Systems (Dairy & Feedyard): Reduce groundwater usage and promote sustainability.
Manure Management Systems (Dairy & Feedyard): Stay environmentally compliant while improving cleanliness.
Single-Purpose Agricultural Structures: Silos, barns, and feed storage facilities tailored to livestock.

Disclaimer: Certain items, such as permanently installed systems or infrastructure, may not qualify as tangible personal property under Section 179. These items might still be eligible for bonus depreciation. Consult a tax professional to confirm eligibility.

For Those Who Completed Projects in 2024

If you installed qualifying equipment or completed a project this year, now is the time to take advantage of Section 179 tax savings.

Here’s what you need to know:

Deduct the Full Purchase Price: Section 179 allows you to deduct the entire cost of qualifying equipment purchased and put into service during the 2024 tax year.
Save Big: For example, if you installed a $400,000 water reclamation system this year and you’re in a 35% tax bracket, you could save $140,000 in taxes—bringing the effective cost of your system down to $260,000.
Eligible Projects: Projects like feed handling systems, water reclamation systems, manure management equipment, and single-purpose agricultural structures (e.g., silos or milking parlors) may qualify.

Don’t let this opportunity slip away! Consult your tax advisor to ensure you file correctly and capture these savings before December 31, 2024.

Ready to look at your tax saving potential? Check out this handy calculator→ https://www.section179.org/section_179_calculator/

2024 Section 179 Limits

For 2024, the deduction limits are:

Maximum Deduction: $1,220,000 for qualifying purchases.
Spending Cap: $3,050,000 – deductions phase out dollar-for-dollar beyond this threshold.
Bonus Depreciation: 60% for costs exceeding the Section 179 cap, available for both new and used equipment.

Key Deadline: All equipment must be purchased and put into service by December 31, 2024, to qualify for the deduction this tax year.

For Those Planning Ahead for 2025

It’s never too early to start planning for your operation’s future. Whether you’re upgrading your feedyard or building infrastructure for your dairy, now is the perfect time to get on MJE’s construction and design schedule for 2025.

Here’s why:

Maximize Future Savings: By planning now, you can ensure your projects qualify for Section 179 in the 2025 tax year, giving you another opportunity to save big.
Secure Your Spot: MJE specializes in designing and constructing large-scale, innovative projects for dairies and feedyards. Our schedule fills quickly, so starting the process early ensures your project stays on track.
Custom Solutions: From water storage and reclamation to manure management systems and feed handling solutions, we tailor every project to meet the unique needs of your operation.

What might qualify?

Imagine installing a water reclamation system for $350,000 to improve sustainability and reduce groundwater usage in your operation. If you’re in a 35% tax bracket, claiming a Section 179 deduction could save you $122,500 in taxes, effectively lowering the cost of the system to $227,500.

For large-scale dairy and feedyard operations, investments like these not only enhance efficiency but also generate significant tax savings, freeing up funds to reinvest in other priorities.

Financing can further amplify these benefits. By financing the water reclamation system, you can deduct the full purchase price under Section 179 while maintaining cash flow for day-to-day operations and other upgrades.

Can Water Reclamation Systems Qualify?

Water reclamation systems are crucial for sustainable dairy and feedyard operations. However, their eligibility for Section 179 depends on several factors:

Portable Equipment: Tanks, pumps, and filtration units that are movable may qualify.
Single-Purpose Agricultural Structures: Systems designed specifically for livestock use could also qualify.
Real Property Exclusion: Permanently installed systems may not qualify but could still be eligible for bonus depreciation.

Disclaimer: Eligibility varies depending on installation and usage. Always consult a tax advisor to understand the specific qualifications for your operation.

Consult a Tax Professional

While Section 179 provides powerful tax savings, it’s essential to ensure compliance with IRS rules and alignment with your broader financial goals. A tax professional can:

Assess your eligibility for deductions.
Navigate state-specific tax laws.
Help you maximize benefits without straining your budget.

Take the Next Step

For 2024 Projects: Talk to your tax advisor today to ensure you leverage Section 179 for qualifying purchases.
For 2025 Planning: Contact MJE now to secure your spot on our design and construction schedule and start planning projects that will transform your operation.

Take advantage of this chance to optimize your operation and take full advantage of the financial benefits available to you. Whether you want to capture savings this year or plan for the next, MJE is here to help you succeed.

11.15.24