Thanks to Section 179, of the Internal Revenue Code, You Can Now Receive a Tax Break for Buying Packaging Equipment
There’s no denying that growing a business is a challenge all to itself, especially when it comes to financing it all, so it’s important to be aware of all of the resources available to you. While you might not have known of Section 179 of the U.S. Internal Revenue Code, it’s time that you take advantage of these tax savings. Believe it or not, buying packaging equipment won’t just help you automate your current workflow, but it’ll help you earn an immediate expense deduction.
What Do You Need to Know About Depreciation?
According to Investopedia’s article on, How Depreciation Affects Cash Flow,
-
“Depreciation is a type of expense that when used, decreases the carrying value of an asset…It’s a method for allocating the cost of a tangible asset over time…The use of a depreciation method allows a company to expense the cost of an asset over time while also reducing the carrying value of the asset.”
If you were acquiring equipment without taking advantage of Section 179’s tax break, then it would take a lot longer to take advantage of your purchase’s depreciation. Each piece of equipment has a different-estimated use life, so the rate of depreciation will vary; there’s also two methods of depreciation that a company can apply.
- Diminishing Value Depreciation
- Business owners can claim a bigger tax deduction within that first year, but the deductions will get smaller in later years and it’ll take longer to fully depreciate the machine.
- Straight Line Depreciation
- Under this method of depreciation, the same amount of depreciation is deducted from the value of an asset for every year of its useful life; at this rate, equipment will depreciate quicker.
Regardless of whichever method is chosen, it’ll still take time for your equipment to depreciate and that means that you’ll have to be patient enough to reap those tax deductions.
What is Section 179?
We know that Section 179 issues a tax break, but there’s more to it than just that; according to Investopedia,
-
“Section 179 is an immediate expense deduction that business owners can take for purchases of depreciable business equipment instead of capitalizing and depreciating the asset over a period of time.”
As opposed to opting for the diminishing value or straight line depreciation method, section 179 gives your business an immediate break on your tax burdens. This tax break is a great opportunity for small businesses that are looking to grow their businesses with the addition of new equipment. It’s important to note that your equipment must be placed in service by the end of 2022 to claim 100% depreciation; if you place the equipment to use in,
-
2023 you’ll only be able to claim 80% depreciation
-
2024 you’ll only be able to claim 60% depreciation
-
2025 you’ll only be able to claim 40% depreciation
-
2026 you’ll only be able to claim 20% depreciation
-
Then the act will officially expire in 2027
So, what is the maximum amount you can deduct under Section 179? Well, according to Industrial Packaging,
-
“Under Section 179, businesses that spend less than $2,500,000 per year on qualified machinery can write off up to $1,000,000 upfront.”
We want to make sure that you’re saving as much money as possible; the last thing we’d want for you to do is miss out on the opportunity to claim that 100% depreciation and major tax break. While a tax break might help you after equipment has been purchased, we know that paying for equipment in full can either be out of the budget or nerve-racking, so what can you do?
Do We Offer Financing?
Thanks to our newest partnership with Providence Capital, we’re now happily offering financing for our SNEED-JET ® thermal and SNEED-PACK equipment. While this is great news, in order to qualify for our financing option, you need to purchase at least $5,000 worth of equipment. So, why did we choose to partner with Providence Capital and how does this benefit you?
-
You can expect an application decision within 24-48 hours
-
You can finance new and used equipment
-
You can choose to make payments between 12-72 months
-
You can finance up to $350K worth of equipment
-
94% of applicants are approved
We’ve managed to #KeepCodingSimple and #KeepPackagingSimple and now thanks to Providence Capital, we’ll be able to #KeepFinancingSimple as well. Just imagine the savings you could take advantage of, if you combine the savings from Section 179 and from flexible payments.
When Should You Order Equipment?
If you take a look at the depreciation rates listed within “What is Section 179?,” then you would have noticed that with each passing year, the amount of depreciation you can claim gets smaller and smaller. Our advice is to order and implement your coding and packaging equipment before the end of 2022 to ensure that you can reap the maximum tax benefit.
When you’re ready to start automating your coding and packaging processes, we’ll be here to help you take those steps. Our experts and resources are here at the ready, all you need to do is decide if you’re ready to keep coding and packaging simple.
