The Section 179 Bomb

By | January 18, 2018

Section 179 increase this yearOk, the dust has settled, the holidays are over, and I have some time to discuss Section 179.

As I mentioned in a post a few weeks ago, Section 179 got a big boost from the Tax Cuts and Jobs Act. But I felt like I had to write about all of the major business aspects of the act, and Mrs. Fletch had all kinds of holiday plans as well, so Section 179 got a paragraph. But now I have a moment where I can sit back and take in all that happened with Section 179, and share it with you.

The title of this post emphasizes how extraordinary this is. The Section 179 deduction was not only given an increase – it literally doubled in size, to one million dollars. This is a massive boost, and will really help a lot of small and medium sized businesses, because they can now write off a million dollars’ worth of equipment for the year. If we assume a tax rate of 25%, this could knock a net of 250k off the tax bill – the sheer size of the numbers is really exciting.

Further, the “cap” of total equipment purchases was raised to $2.5 million before the deduction starts to phase out on a dollar to dollar basis. Another change is certain improvements to non-residential property can now be written off.

Lastly, the “bonus depreciation” (which is usually taken after Section 179 is used up) has been raised to 100%, and now includes used equipment as well (Section 179 itself has always allowed for used equipment).  That’s a nice little bow to wrap things up.

These changes are coming at the opportune time as well, because the economy was strong last year. So I’m sure companies will use 2018 to really “gear up”. This is good news for everyone – companies that make equipment, their employees, the towns they are based in, etc… everyone benefits when businesses buy equipment, and 2018 should be a banner year for this. Maybe even the best ever.

Get your equipment financing lined up, and get shopping, because Section 179 is HUGE.

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