2018 BUSINESS TAX INFORMATION
Lower the True Cost of Ownership on Your Business Equipment
There are a number of very attractive tax benefits that are currently available that can be utilized to supplement your facilities growth.
Use this tax calculator to estimate your tax benefit for a qualified purchase for your facility.
Tax Savings Calculator - Section 179 Deduction
Please enter the cost of equipment and click 'Submit'.
Tax benefits are calculated using an estimated income tax rate of 35%.
This calculator presents a possible tax scenario. This page and calculator are not tax advice. The indicated tax treatment applies only to transactions deemed to reflect a purchase of the equipment or a capitalized lease purchase transaction. Please see your tax advisor to determine the tax ramifications of acquiring equipment or software in your particular situation.
Business Equipment - Section 179 Expensing Allowance
IRS Section 179 is a permanent tax law that encourages investment. It allows smaller businesses to immediately write off the full price of qualifying asset purchases (machinery, computers, and other tangible goods) rather than depreciating them over several years. Under the IRS Section 179, a taxpayer may expense up to $500,000 of qualified equipment placed in service in 2018 (amounts will be indexed for inflation in future years). The rules are designed for small companies, so the $500,000 deduction phases out when a business purchases more than $2,000,000 in one year. (Companies cannot write off more than their taxable income). Section 179 applies to new and used equipment purchases, but must be "new to the business".
Bonus Depreciation - 50% for 2018
In 2018 businesses are encouraged to invest by allowing an additional first-year depreciation allowance of 50% for qualified investments made after December 31, 2017 and before January 1, 2019. Bonus depreciation is available for all businesses and is not capped at a certain dollar level however, only new property applies. The 50% immediate expensing of asset acquisitions will be permitted for 2017 before reducing to 40% in 2018 and 30% in 2019, when it will then disappear altogether.
Benefits of Finance Agreements and Capital Leases
Maximize the tax benefit with a Group Financial Services finance agreement (conditional sales contract) or capital lease. Both allow a business to acquire equipment with a low monthly payment while taking advantage of the Section 179 - $500,000 expensing allowance. Examples of capital leases include a $1.00 buyout lease and a capitalized 10% purchase option lease.
Tax Code Section 179 & Election to Expense Detail
The election, which is made on Form 4562, is for the tax year the property was placed in service or an amended return filed within the time prescribed by law. The total cost of property that may be expensed for any tax year cannot exceed the total amount of taxable income during the tax year. Section 179 property is property that you acquire by purchase for use in the active conduct of your business. To ensure property qualifies, reference Publication 946.
This expense deduction is provided for taxpayers (other than estates, trusts or certain non-corporate lessors) who elect to treat the cost of qualifying property as an expense rather than a capital expenditure. Under Section 179, equipment purchases, up to the amount approved for a given year, can be expensed (deducted from taxable income) if installed by December 31st. Non-Tax leases qualify for this deduction in their year of inception. Any excess above the expensed amount can be depreciated depending on the equipment type. Not all states follow federal law. Contact your tax advisor for further detail or visit www.irs.gov for specific detail.
Interest in learning more? Contact Group Financial Services for more information. We'll provide you with a free consultation and extend finance solutions so you can acquire the business equipment you need.
Contact a Group Financial Services representative today to discuss financing your next equipment or software purchase.
Note: For complete details, or changes to the tax incentives, please visit www.irs.gov or contact the IRS helpline at: 800-829-4933