How The Tax Cuts And Jobs Act Affects Businesses Purchasing New Technology
The new Tax Cuts and Jobs Act allows businesses to write off 100% of the equipment they purchase in 2018.
The change, which was retroactively set to September 27, 2017, is incentivizing organizations throughout Southern California to refresh their desktop computers, upgrade their phone systems, migrate their data to a new server, and much, much more.
Instead of stretching depreciation out over years – a requirement of the old tax law – now new purchases can be de-valued from day one.
“This law is a game-changer, and we’re already seeing the impact,” says Luca Jacobellis, President and CCO of Cal Net. “A number of our clients have already started re-investing in their businesses because, at the end of the day, that’s what’s going to help you grow.”
The “new” write-offs are expanded forms of the bonus depreciations that have been around for years, and while many smaller businesses may have already been receiving 100% deductions under Section 179 of the current tax code, the new law expands protections and opportunities.
The result is a reduction in taxable income by way of a reduction in business income. Take a look at this example of a business owner who purchases $1,150,000 worth of new equipment this year:
“Owners on the cusp of the income limit can now re-invest in what their businesses need to reach their full potential, from content management systems and collaboration tools, to firewalls and data back-ups,” Luca says.
Other changes to business taxes under the new Tax Cuts and Jobs Act:*
* Info courtesy of the Tax Foundation