Popular Incentives and Deductions Continue for Purchasers of Packaging Equipment
Though we've spoken about Section 179 of the IRS tax code on previous occasions, the beginning of 2016 warrants a refresher for those who may be looking to purchase packaging machinery in the coming year. In general terms, Section 179 is a deduction for qualifying equipment that will be purchased during the year 2016. Though especially beneficial for small businesses, understanding Section 179 can mean tax benefits for any entrepreneur or large company buying equipment this calendar year.
Section 179 of the tax code sort of re-writes the rules of depreciation. Rather than write off a small portion of new equipment over several consecutive years, businesses may now write off up to $500,000.00 the year that the equipment is purchased. There limitations do apply regarding equipment and there are also caps on the amount spent on the equipment, Section 179 works to fre up cash, especially for small and medium businesses.
Also back in 2016 is Bonus Depreciation for businesses that make enormous equipment purchases in the given year. As noted above, Section 179 expensing has some limits, one being that the deduction begins to fade away. Once over two million in purchases, companies can still benefit from the Bonus Depreciation, though this section too has limits. Among others, Bonus Depreciation will only apply to new equipment, where the expensing described above can apply to both new and used equipment, as long as it is new to the buyer.
Though packagers can expect changes in Section 179 on an annual basis, it appears that the benefits will be available in some extent until at least 2019. Bonus depreciation may or may not be available after 2016, so large equipment purchases may simply lose the benefit after the current year. Expensing appears to be set through 2019 at $500,000.00, but this section of the IRS Code has been nothing in past years if not unpredictable.
Keep in mind that Liquid Packaging Solutions manufactures packaging equipment, such as power conveyors, liquid fillers, capping machinery, rinsing equipment and more! Liquid Packaging Solutions is NOT a law firm or an accounting firm or even close to being a tax professional, nor do we have any desire to be any of these things! If you are looking at purchasing new or used packaging equipment in 2016, please do NOT rely on this article or consider it tax or legal advice. Instead, speak to a tax and/or legal professional to determine whether the equipment qualifies for Section 179 deductions and other benefits BEFORE purchasing the equipment.
Once you are ready to explore packaging options to find the best solution for your own project, then it's time to call LPS and our Packaging Specialists for advice!