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Take Advantage of the Tax Cuts and Jobs Act Bonus Depreciation

Take Advantage of the Tax Cuts and Jobs Act Bonus Depreciation

Don't Wait to Get Your Equipment

With the passage of the Tax Cuts and Jobs Act (TCJA), the Section 179 and Bonus Depreciation deduction opportunity has been significantly increased starting in 2018.

What is Section 179, and how has it changed?

Internal Revenue Code Section 179 allows businesses to expense the full purchase price of qualifying equipment purchased during the tax year. When you buy a piece of qualifying equipment, you will likely be able to deduct the full purchase price on your business income tax return.

Prior to the TCJA, the government capped business taxpayers’ Section 179 deduction at $500,000, with a phase-out beginning at $2 million. The new Act raised the deduction limit to $1 million and the phase-out threshold to $2.5 million.  This increases Section 179 benefits for small and mid-size businesses who spend less than $3.5 million per year for equipment.

What is Bonus Depreciation, and how has it changed?

Bonus Depreciation, allows business taxpayers to deduct additional depreciation for the cost of qualifying business property, beyond normal depreciation allowances.

Before the TCJA, the IRS limited Bonus Depreciation to new equipment. The new law now allows for depreciation on “first use” used equipment as well. The new rules increase Bonus Depreciation to 100 percent for all qualified purchases made between September 27, 2017 and January 1, 2023.

The Bottom Line

Bottom line, if customers purchase a new or used lift prior to yearend under the parameters listed above they will likely be able to deduct 100% of the cost of the unit on their business tax return providing significant tax savings.


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