Here’s the Rundown
Section 179 is a tax code designed to help small and large businesses alike purchase equipment and software. It allows businesses to deduct the full amount of equipment purchased, leased, or financed, up to $1,040,000 (in 2020). It’s the government’s way of saying “invest in your business!” So listen to Uncle Sam and treat yourself.
- Section 179’s deduction limit for 2020 is capped at $1,040,000 thanks to the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), which was passed by the House and the Senate and signed into law on December 18, 2015.
- Section 179 can greatly help your bottom line. By deducting the full cost of equipment purchase, you lower the amount you pay for equipment and/or software substantially, while benefiting from the equipment purchased. It’s a win-win.
- Section 179 is simple to use. All you need to do is buy the equipment for your business and fill out IRS Form 4562. That’s it. And you can find a link to the current version of the tax form on the IRS website.
Consider a $25,000 investment in capital equipment. With Section 179, and assuming your business is in a 35% tax bracket (the common US corporate tax rate), your business’s cost savings are $8,750, effectively reducing the equipment cost to $16,250. Calculate your cost savings here.
Section 179 enhancements typically expire at year’s end. The various Stimulus Acts over the past few years have included special provisions for Section 179 and bonus depreciation, but a word to the wise—put your machinery and software orders in now.
Section 179 is a major incentive for businesses to keep up with state-of-the-art machinery technology, but it’s a “use it or lose it” proposition. This means you only have until December 31, 2020, to take full advantage of Section 179.
What Kind of Equipment Purchase Can You Invest In?
- Business Vehicles
- Office Furniture/Equipment
Make your manufacturing company’s wish list ASAP, before the tax incentives expire for this calendar year! Think about the following concerns:
- Do you need to up your manufacturing productivity?
- Do you need to reduce scrap waste?
- Are you facing any problems related to machinery throughput?
- Are you having difficulties keeping up with orders or shipping products on time?
- Are your labor costs too high?
- Are you using outdated methods like tape measures and/or manual stop gauges/clamps?
- Are you having a tough time training new employees?
- Are you facing any problems related to quality control?
- Do you struggle to meet just-in-time or build-to-order demands?
- Are your competitors pricing you out?
If you answered yes to any of the above, investing in TigerStop equipment under Section 179 can help. For example, say you’re looking to purchase a TigerTurbo or HeavyDuty 2 with touch screen software. These easy-to-use pushers and positioners will increase productivity and yield. You’ll be able to get more product out the door, and on time, due to increased throughput. Your machine set-up time will go to zero, and your parts will be cut accurately, improving quality control. You will save on labor costs as operators spend less time producing more, all while reducing rework and scrap waste expenditures.