November 6th, 2014
Section 179-Still Some Savings to Be Had
Last year at this time I wrote about Section 179 advising anyone considering an equipment purchase to complete the sale and get the equipment installed by the end of the year.
Well, section 179 is still hanging around for tax year 2014. This year the tax benefit for has been much reduced but can still be significant for total equipment, software and/or vehicle purchases totaling $200K. After the $200K total purchase limit is breached, the tax advantage decreases on a dollar for dollar basis until it becomes essentially zero at $225K. Also, there is no bonus depreciation this year as there was in years past.
Many of the websites dealing with the changes to Section 179 have not been updated and therefore can be confusing, but I did find one that has the correct information in place along with an excellent Tax Savings Calculator. This can be found at http://www.crestcapital.com/tax_deduction_calculator
So, if you are thinking about buying new or used equipment for the factory, new software to enhance productivity, or new vehicles to replace less reliable ones, go ahead and do so and get these into action by 12-31-14 so that you can claim the deduction and save money.
The percentage savings is more dramatic for smaller purchases. For example, if you purchase a pre-owned glass washer for $25,000, your net savings by taking the Section 179 tax deduction will be $8,750 or 35 percent, whereas purchasing an automated sealant gunning machine for $200K will net you a savings of only 10.5 percent. Still 10.5 percent of $200K is $21,000 and certainly not to be ignored.
Given this week’s midterm election results, I would expect to see section 179 continued for Tax Year 2015 as it is truly designed to help small to medium sized businesses invest for the future. Still, there are no guarantees.
So, if you have been on the fence regarding a new or even used equipment purchase, an investment in a new software module, or looking to upgrade your fleet with new vehicles, now is the time to make the decision and take advantage and cut that check!