Machinery Finance Tax Incentives Available for 2021
Invest in Yourself! Congress has committed to providing valuable economic incentives to manufacturers who purchase capital equipment.
The Section 179 tax deduction allows companies to write-off up to $1,000,000 of equipment if total acquisitions are less than $2,500,000. If capital acquisitions exceed $2,500,000, this write-off is reduced dollar for dollar. For instance, if a company acquires $2,600,000 of equipment, it is able to write-off $1,000,000 less $100,000 (the amount of capital acquisition over the $2,500,000 limitation) for a net write-off of $900,000. Once a company’s capital acquisitions reach $3,500,000, it no longer qualifies for any Section 179 deduction. Equipment which is new to a company (for example, buying a new or used machine), can be expensed under Section 179.
100% Bonus Depreciation
Companies are able to write off 100% of a machine acquisition this year. There is no limitation on how much equipment may be expensed through bonus depreciation. Equipment which is new to a company (for example, buying a new or used machine) can be expensed under Bonus Depreciation.
In the example above, you could choose to pay the government $87,500, or you could choose to pay yourself $87,500 instead. Take advantage of these tax savings and choose to invest in yourself and your business.