Woman in home office reviewing paperworkFarmers looking to make equipment purchases before year’s end have two options to take advantage of tax benefits. The Section 179 deduction limit for 2022 was raised to $1,080,000, with an equipment spending cap phasing out at $2,700,000 to be used for new and used equipment. So, if you spend less than $1.08 million in 2022, producers can write it off in full, which helps reduce your taxable income.

Additionally, bonus depreciation should be considered for purchases.

After a piece of equipment is purchased, a producer can deduct part of the depreciation each year until it is entirely written off. New pieces of equipment at $300,000 can depreciate almost the entire amount yet in 2022. Or, you can elect out of bonus depreciation and depreciate the asset over its useful life.

Read more on tax advantages for equipment purchases here.