I was reading the other day about how businesses were using the tax dollars from the Tax Cut and Jobs act passed last December. The “reports”, predictably, are conflicting. Some publications claim business spending is up. Others are critical, saying businesses are not using those funds to invest in themselves.
Personally, being in the industry, I believe the former over the latter. In my experience, businesses are investing in themselves, and I do believe that it’s partially due to the lower taxes the Tax Cut and Jobs Act brought about.
And this brings me to mentioning Section 179 again, because it’s aligned to form the perfect financial storm this year. And, like a hurricane, I’m even naming that perfect storm – “The 2018 Tax Cut and Section 179 Double Dip”. And it works like this:
Most businesses got a healthy tax cut, and find themselves with more funds than they expected to have. This is a great thing. And many of those businesses are using this money saved on taxes to reinvest in themselves by buying new (or new to them) equipment. That’s the first half of the storm.
But like a hurricane, the path can often circle back and hit again. This is the second half – businesses who used the tax savings to buy equipment can now deduct the full price of that equipment using Section 179 (which was raised to one million in the Tax Cut and Jobs Act). So they get to keep more of their money, which means they are technically double dipping (in a good way). They get tax savings, and use those tax savings to get MORE tax savings. Plus they get the new equipment. It’s win / win / win.
I’ve been writing this blog for more than a decade, and I’ve never seen a better time than 2018 to buy new equipment and use Section 179. It’s the perfect storm, and you should take advantage of it before it blows away.