Packaging Equipment Tax Incentives Extended Under The Tax Cuts and Jobs Act
As we gear up for the end of 2019, tax time is always lurking in the shadows. And as long as memory serves, Liquid Packaging Solutions has been talking about bonus depreciation and Section 179 tax incentives for the purchase of packaging machinery. While the incentives have been scheduled to phase out, or even end completely, multiple times in the past, they continue to be offered to business owners in 2019. In fact, one might argue the incentives have been strengthened for the coming tax year!
Generally speaking, Section 179 of the tax code allows businesses to deduct the full purchase price of certain equipment purchased or financed during the specific tax year. There are of course limits, such as caps, and conditions, including but not limited to equipment that is used for business purposes more than 50% of the time. However, in the year equipment is purchased and put in to service, but Section 179 still remains a useful tool for all businesses, with emphasis on small and medium sized businesses, to acquire some tax relief.
Bonus depreciation for 2019 was set to decline to 30% under previous laws, however, that percentage has been raised back to 100% for the 2019 tax year. This means that, for qualifying equipment, the entire cost of the equipment can be deducted for 2019, rather than spreading depreciation out over several years, again reducing tax burdens. In some cases, businesses will use both the Section 179 deduction and bonus depreciation on the same equipment.
The rules surrounding these two similar sections are not exactly the same, and LPS is not an accounting firm nor do they employ tax experts. Before making purchases of packaging equipment or any business assets, you should speak to an accountant or tax expert to ensure that the property qualifies for these incentives and understand exactly how best to use them. The newest rules extend both the Section 179 incentive and bonus depreciation, while also increasing the percentage of bonus depreciation available. However, as evidenced by the past changes, there is no certainty that the rules will remain the same, or even in effect, from year to year.
If you are currently looking for conveyor systems, filling machines, capping machines or other packaging equipment, call LPS today and take advantage of these incentives that can help lower the cost of the purchase or lease in 2019.
For more info on the tax incentives, visit Section179.org.