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There’s Still Time to Get Valuable Tax Incentives on PU Equipment

Here’s some great – and potentially very profitable – news for our customers. The Tax Cuts and Jobs Act that was signed into law in December of 2017 contains a hidden benefit for many industries: the expansion of Section 179. This expansion allows businesses to immediately deduct up to $1 million in qualifying equipment purchases for the 2018 tax year.

Created in 1958, Section 179 allows companies to take depreciation deductions for certain assets in one year rather than depreciating those items over the useful life of the product. The tax reform bill greatly expanded the products covered by Section 179, including manufacturing equipment like the kind used in foam dispensing.

This change to immediate expensing provides a great opportunity for companies to save money when making new purchases…often enough to influence purchase vs. repair decisions, providing the necessary motivation to replace aging systems with new and more efficient equipment.

To illustrate the potential savings, consider the example of a $14,000 equipment purchase in years past (39-year depreciation schedule) compared to 2018:

Old Tax Law

  • Equipment Cost: $14,000

  • 2018 Deduction: $350

  • 2018 Tax Savings: $125

Current Tax Law

  • Equipment Cost: $14,000

  • 2018 Deduction: $14,000

  • 2018 Tax Savings: $5,000

These costs and savings are estimated. Be sure to check with your tax advisor to see how Section 179 applies to your specific situation. And be sure to contact your FSI Account Manager to make your equipment purchases by year end.