How 2019 Tax Break Updates Can Benefit Your Sheet Metal Shop

Section 179 has increased its’ deduction limit to one million dollars for 2019, as stated in H.R.1, aka, The Tax Cuts and Jobs Act. The limit on equipment purchases remains at $2.5 million.

Most types of business equipment that your company buys or finances now qualify for the Section 179 deduction. It’s very likely that your business will purchase many of these goods during this year, and now would definitely be the right time. Section 179 is designed to make purchasing equipment during this calendar year financially feasible.

What qualifies for tax breaks?

The equipment listed below must be purchased and used between January 1 and December 31 of this tax year, 2019:

• Equipment (machines, etc.) purchased for business use
• Tangible personal property used in business
• Business Vehicles with a gross vehicle weight in excess of 6,000 lbs (see Section 179 Vehicle Deductions)
• Computers
• Office Equipment and furniture
• Property attached to your building that is not a structural component of the building (i.e.: a printing press, large manufacturing tools, and equipment)
• Partial Business Use (equipment that is purchased for business use and personal use: generally, your deduction will be based on the percentage of time you use the equipment for business purposes).
• Certain improvements to existing non-residential buildings: fire suppression, alarms and security systems, HVAC, and roofing. Check Section 179 to see if your purchase qualifies before investing.

The above equipment qualifies whether new or bought used during the tax year,  and also regardless of whether it was purchased outright, leased, or financed. Bonus depreciation is being offered at 100% for 2019, another great reason to purchase this year.

Bonus depreciation is useful to very large businesses spending more than the Section 179 Spending Cap (currently $2,500,000) on new capital equipment. Also, businesses with a net loss are still qualified to deduct some of the cost of new equipment and carry-forward the loss. When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation – unless the business had no taxable profit, because the unprofitable business is allowed to carry the loss forward to future years.

Example:

Cost of equipment: $800,000.00

35% Tax Bracket

Section 179 deduction = $800,000.00

Cash savings on purchase ($280,000.00)

Lowered cost of equipment= $520,000.00

See fully updated 2019 Section 179 Calculator to see how this tax deduction affects your company.