As tax season approaches, business owners should be aware that there are specific tax deductions available that reduce the cost of your industrial generator investment. Section 179 is a tax deduction that can offset the cost of your new or used industrial generator and can equal huge tax savings for your small business during tax season.
Based on the IRS Tax Cuts and Jobs Act (TJCA), Section 179 is a tax allowance that allows businesses to deduct the total cost of any capital asset (such as a new or used industrial generator) on their corporate tax return immediately, instead of having to depreciate the asset over its useful life. In prior years, tax depreciation for industrial generators occurred during a specified time length, and tax breaks were determined by an estimated usage of the asset by a business.
This outdated process not only creates accounting issues for most companies but is often done incorrectly, leaving money on the table for those who need it most, like small business owners. The IRS hopes Section 179 will address this issue. Section 179 is a tax deduction plan by the government to help small businesses receive immediate tax relief from large equipment purchases and works as an incentive for business owners to invest in themselves by buying more machinery and materials that will increase future growth.
Ideally, Section 179 eliminates any wait for the possible reimbursement of your industrial generator purchase and allows business owners to take advantage of receiving a full purchase price refund in the current tax year on your corporate taxes. For any tax year beginning after 2017, the TCJA raises the maximum Section 179 expense price from $500,000 to $1,000,000, with the phase-out limit increasing from $2 million to $2.5 million. For tax years beginning after 2018, these amounts have been indexed for inflation. To take advantage of these robust tax savings, your industrial generator must meet certain eligibility requirements.
To determine if the purchase of your industrial generator is eligible for a tax deduction under Section 179, consider the following eligibility requirements.
Any small or medium-sized business or any large corporation that purchases any new or used business equipment during the tax year of 2021 should qualify for the Section 179 Deduction. However, the cost must be less than $3,670,000. Businesses can use the Section 179 Deduction to purchase any needed equipment now and benefit from the savings during the tax season in the following year.
To qualify for a Section 179 Deduction, your equipment or asset must be:
Ready to purchase a new or used industrial generator and invest in the future growth of your business? Contact us today to speak with an equipment expert to determine which industrial generator will suit your business needs!