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Machinery Finance Tax Incentives Available for 2020

Invest in Yourself! Congress has committed to providing valuable economic incentives to manufacturers who purchase capital equipment.

$1,000,000 Write-off

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.

Pay Yourself

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.