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Tax Benefits on Equipment

 

Section 179 Allowance:

Any new or used equipment purchased in 2020 can be deducted in full (up to a total of $1,040,000) in year 1 if the total amount of applicable assets purchased does not exceed $2,590,000. Once the $2,590,000 (cost) threshold is surpassed, the Section 179 allowable deduction ($1,040,000) will begin to be phased out and will be phased out at $3,630,000 (cost) of current year additions. The increased allowance applies to units contracted for and put into service through December 31, 2020. The balance of equipment investment above $2,590,000 is eligible for Standard MACRS depreciation.

 

Bonus Depreciation:

The applicable bonus depreciation percentage will now be 100% for property placed in service during 2020. Bonus depreciation applies to new and used equipment.

 

Example of a lift truck purchase of $25,000
 Purchase Price $25,000
 1st year Section 179 allowance $1,040,000
 Total 1st-year deduction $25,000
 Potential 1st-year tax savings
(21% tax bracket)
$5,250
 After-tax cost of equipment $19,750

 

 

Contact us to learn more about the 179 Tax Benefit and how it relates to material handling solutions.

 

*Please consult your tax advisor regarding the application of the tax laws to your specific situation.