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:*

  • Lower the corporate income tax rate permanently to 21% starting in 2018.
  • Establish a 20% deduction of qualified business income from certain pass-through businesses. Specific service industries, such as health, law and professional services, are excluded. However, joint filers with income below $315,000 and other filers with income below $157,500 can claim the deduction fully on income from service industries.
  • Allow full and immediate expensing of short-lived capital investments for five years. Increases the section 179 expensing cap from $500,000 to $1 million.
  • Limit the deductibility of net interest expense to 30% of earnings before interest, taxes, depreciation and amortization (EBITDA) for four years, and 30% of earnings before interest and taxes (EBIT) thereafter.
  • Eliminate net operating loss carrybacks and limits carryforwards to 80% of taxable income.
  • Eliminate the domestic production activities deduction (section 199) and modifies other provisions, such as the orphan drug credit and the rehabilitation credit.
  • Enact deemed repatriation of currently deferred foreign profits, at a rate of 15.5% for cash and cash-equivalent profits and 8% for reinvested foreign earnings.
  • Move to a territorial system with base erosion rules.
  • Eliminate the corporate alternative minimum tax.

* Info courtesy of  the Tax Foundation

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