Imagine sitting down with your freshly filed 2024 tax return, only to feel your heart drop. The number staring back at you is far larger than you anticipated—a tax bill that wipes out a significant chunk of your hard-earned money. Maybe it was a surprise bonus, a successful side hustle, or an investment that paid off a little too well. Whatever the reason, a high tax bill in 2024 has left you wondering: What can I do about this? If this resonates with you, you’re not alone. Many taxpayers faced the same shock this year, and while you can’t rewrite the past, you can take steps to ease the burden moving forward.
The good news? There are strategies you can start implementing now to potentially lower your tax liability in future years, like 2025 and beyond. In this detailed guide, we’ll explore five options: Section 179 deductions, real estate depreciation, heavy equipment leasing, the Augusta rule, and oil and gas investments. These approaches were touched on in a previous post, where we examined their pros and cons. Here, we’ll shift the focus to what you can do after a high tax bill, offering practical insights to help you regain control of your tax situation. Each strategy has its strengths and limitations, and not every one will fit your circumstances—but by the end, you’ll have a roadmap to explore with confidence.
Let’s dive in and turn that tax frustration into a plan for the future.
1. Section 179: Turning Business Expenses into Tax Savings
What Is Section 179?
Section 179 is a tax code provision that lets businesses deduct the full purchase price of qualifying equipment or software in the year it’s bought, rather than spreading the deduction over several years. Think computers, machinery, or even vehicles—items essential to your business operations. The deduction limit is generous (over $1 million in recent years, adjusted annually), making it a popular choice for small business owners looking to cut their taxable income.
How It Could Help After a High Tax Bill
If you’re reeling from a 2024 tax hit, Section 179 won’t erase what’s already done—but it can set you up for a better 2025. For example, if you buy a $20,000 piece of equipment for your business next year, you could deduct the entire amount from your taxable income in one go. At a 25% tax rate, that’s $5,000 less you’d owe the IRS. It’s a way to reinvest in your business while softening the tax blow.
The Catch
Section 179 isn’t a free-for-all. You need an active business—whether it’s a full-time gig or a side hustle—and the equipment must be used for business purposes at least 50% of the time. No business? No deduction. Plus, the IRS expects your business to be legitimate and profitable, not just a tax dodge. If you’re an employee without self-employment income, this strategy won’t apply.
Action Steps
- Already a Business Owner? Look at your 2025 budget. Could you justify new equipment or software? A new laptop for a freelancer or a delivery van for a small retailer could qualify.
- No Business Yet? Consider starting one. Even a modest side gig—like consulting or selling handmade goods—could open the door to Section 179. Just ensure it’s a real venture, not a sham.
- Check the Rules: The equipment must be in service by December 31st of the tax year you’re claiming, so plan ahead.
Example in Action
Take Alex, a part-time photographer. In 2025, he invests $8,000 in a new camera and editing software, deducting it all under Section 179. His taxable income drops, saving him $2,000 in taxes at his 25% bracket. Without a business, though, Alex would be out of luck.
Key Takeaway
Section 179 is a game-changer for business owners willing to invest in their operations. If you can make it work, it’s a proactive way to turn a high 2024 tax bill into a lesson for smarter planning.
2. Real Estate Depreciation: Building Wealth and Tax Breaks
What Is Real Estate Depreciation?
When you own a rental property, you can deduct the cost of the building (not the land) over its “useful life”—27.5 years for residential properties, 39 for commercial ones. This depreciation reduces your taxable rental income without affecting your cash flow, making it a favorite among real estate investors.
How It Could Help
A high 2024 tax bill might have you looking for long-term relief, and real estate depreciation fits the bill. Say you buy a $300,000 rental property in 2025, with $200,000 tied to the building. You’d deduct about $7,272 annually for 27.5 years. That’s $7,272 less taxable income each year, which could save you $1,818 at a 25% rate—year after year.
The Downsides
This strategy requires you to own rental property, not just your home. If you’re not already a landlord, it’s a big leap—think down payments, maintenance, and tenant headaches. Plus, when you sell, depreciation recapture taxes (up to 25%) might offset some savings. It’s not an instant fix for 2024; it’s a slow burn for future tax years.
Action Steps
- Current Landlord? Ensure you’re claiming depreciation correctly. Work with your accountant to maximize this deduction.
- New to Real Estate? Research markets for rental properties. Start small—a duplex or condo—if the numbers (rental income vs. costs) make sense.
- Think Long-Term: Depreciation won’t erase your 2024 bill, but it can chip away at future liabilities.
Example in Action
Maria owns a rental house valued at $250,000, with $180,000 in the building. She deducts $6,545 yearly, lowering her taxable income from rent. If she’d jumped into real estate after her 2024 tax shock, she’d be building wealth and tax savings for 2025.
Key Takeaway
Real estate depreciation is a steady, reliable strategy for rental property owners. It’s not fast, but it’s a solid way to soften future tax hits if you’re ready to invest.
3. Heavy Equipment Leasing: Big Risks, Big Rewards
What Is Heavy Equipment Leasing?
This involves buying expensive gear—like tractors, bulldozers, or industrial machines—and leasing it to businesses. You earn rental income and depreciate the equipment for tax purposes, reducing your taxable income.
How It Could Help
After a high 2024 tax bill, heavy equipment leasing could offer dual benefits: cash flow and tax deductions. Imagine buying a $120,000 excavator in 2025 and leasing it for $25,000 annually. You’d also depreciate it (say, over 7 years), deducting $17,143 yearly. That’s a significant income offset, potentially saving thousands in taxes.
The Risks
This isn’t a beginner’s game. Equipment is costly, and leasing demand can tank during economic slumps—leaving you with a pricey paperweight. Unlike stocks or real estate, equipment loses value fast and needs upkeep. It’s best for those with deep pockets and a stomach for risk.
Action Steps
- Got Capital? Research equipment in demand (e.g., construction or farming gear) and connect with leasing companies.
- Risk Assessment: Can you handle a dry spell if leases dry up? Don’t overextend after a tough tax year.
- Tax Planning: Pair depreciation with rental income to optimize your return.
Example in Action
Tom invests $100,000 in a tractor, leasing it for $20,000 a year and deducting $14,286 annually (7-year depreciation). He saves on taxes and earns income—until a recession hits, and his lessee backs out, leaving him with costs and no revenue.
Key Takeaway
Heavy equipment leasing can cut taxes and generate cash, but it’s a high-stakes play. If you’re risk-averse or cash-strapped post-2024, look elsewhere.
4. The Augusta Rule: A Niche Tax-Free Bonus
What Is the Augusta Rule?
Named after Augusta, Georgia—home of the Masters golf tournament—this IRS rule lets you rent your primary home for up to 14 days a year without reporting the income. It’s a small but sweet tax perk.
How It Could Help
If your 2024 tax bill stung, the Augusta rule could offer a little relief in 2025. Live near a big event? Rent your home for $1,500 a day during a 10-day festival, and pocket $15,000 tax-free. It’s not a huge offset, but it’s something.
The Limitations
Location is everything. No events, no demand. Even in prime spots, 14 days caps your earnings, and hosting renters means prep and cleanup. For most, it’s a minor blip against a big tax bill.
Action Steps
- Prime Location? Check your calendar for local events—think sports, concerts, or conventions—and list your home on rental platforms.
- Weigh the Effort: Is the payout worth the hassle? For small sums, it might not be.
- Stay Compliant: Keep it under 14 days to avoid tax reporting.
Example in Action
Jake lives near a NASCAR track and rents his house for 12 days, earning $12,000 tax-free. It’s a nice perk, but his $30,000 2024 tax bill laughs it off. In a quiet town, he’d get nothing.
Key Takeaway
The Augusta rule is a quirky, low-impact option. If you’re in the right spot, it’s free money—but it won’t solve a big tax problem.
5. Oil and Gas Investments: High Stakes, High Tax Relief
What Are Oil and Gas Investments?
These range from funding drilling projects to buying royalty interests. The tax perks are massive: deduct up to 70-80% of your investment as intangible drilling costs (IDCs) in year one, plus depletion allowances on any income.
How It Could Help
A high 2024 tax bill often signals high income—perfect for oil and gas deductions. Invest $60,000 in a drilling project in 2025, deduct $48,000 upfront, and slash your taxable income. If the well produces, you could see cash flow for years, blending tax savings with profit.
The Risks
Oil and gas is a gamble. Dry wells, crashing prices, or bad operators can sink your investment. It’s illiquid—your money’s locked in—and requires serious cash (often $25,000+). But for high earners, the tax breaks can outweigh the risks with careful picks.
Action Steps
- Educate Yourself: Study oil markets, operators, and project types (drilling vs. royalties).
- Vet Investments: Work with advisors to avoid scams and pick winners.
- Plan Big: Use this to offset high income, not just scrape by.
Example in Action
Kelly invests $50,000 in a well, deducts $40,000 in IDCs, and saves $10,000 in taxes (25% rate). The well flows, paying $5,000 yearly. A dry well, though, would’ve cost her everything.
Key Takeaway
Oil and gas can deliver big tax relief and income, but it’s complex and risky. If you’re ready to dive in, it’s a potent post-2024 strategy.
Wrapping Up: Your Next Steps After a High 2024 Tax Bill
A high tax bill in 2024 feels like a punch to the gut, but it’s not the end of the story. You can’t undo the past, but you can shape the future. Here’s what we’ve covered:
- Section 179: Great for business owners buying equipment.
- Real Estate Depreciation: A slow, steady win for landlords.
- Heavy Equipment Leasing: Risky but rewarding for the bold.
- Augusta Rule: A small perk if you’re in the right place.
- Oil and Gas Investments: Big tax breaks with bigger risks.
Each strategy demands planning, and none are one-size-fits-all. Your best move? Sit down with a tax pro to tailor these ideas to your life—your income, goals, and risk tolerance. Start now, and turn 2024’s tax pain into 2025’s tax gain. You’ve got this.
