Do you need new office equipment for your business? Then you should be aware of the proposed tax reforms and the impact the new legislation is expected to have on tax savings for your business. With the proposed changes, you have a unique opportunity to save your company a lot of money if you act fast. This article will show you how you can save money in 2018 by buying your equipment before the year-end.
The tax reform will have a significant impact on individual taxpayers and businesses. There will be changes in tax rates, deductions, and the inevitable repealing of the existing tax law. But what do these reforms mean for a company looking to buy equipment for its office? Here are some of the significant advantages you should expect.
Lowering Tax Rates
The proposed tax plan will reduce the tax rate to 20% for business pass-through entities and corporations which include S Corporations, Partnership, LLC, etc. That significantly differs with the current rates that stand at 39% for pass-through entities and 35% for corporations. The reduced rates will increase the after-tax income for your businesses. Ideally, this is meant to encourage additional spending and investment for your company.
But how can your business take advantage of lower tax rates to save money on office equipment? Under the proposed tax plan, the tax rates will be lower in 2018. That means that the taxable savings of your deductions are worth much more in 2017. Any deduction you enjoy in 2017 will be worth 75% more than the deductions in 2018. Buying your equipment before the end of the year can, therefore, save you a lot of money.
Cost Recovery for Property Investments
Although the deductible corporate expenditures may reduce, deductions under section 179 will remain intact. Changes in section 179 deduction provision will now enable your business to write off the full cost of purchasing new equipment immediately as opposed to depreciating the asset over several years. This change will give your business an opportunity to improve its operations and enhance your worker’s skills leading to more employment opportunities and increased productivity.
The 50% Bonus Deduction
Additionally, 2017 is the last year that the 50% bonus deduction will be fully operational before it starts to phase down in 2018. That means that your business can only depreciate an additional 50% of any equipment cost above the 179 deduction limit if you purchase assets in 2017. In 2018, the bonus depreciation will reduce to just 40% in 2018 and decrease to 30% in 2019.
For instance, if you buy business assets worth $650,000 in 2017, you can apply the whole $500,000 section 179 deduction plus half of the remaining $150,000 that is above $500,000 ($75,000). Add this to the $15,000 regular first-year depreciation to get a total first-year deduction of $590,000. If you buy the assets at the same price in 2018, you will only depreciate 40% of the amount exceeding $500,000, all the more reason to buy your equipment in 2017.
Here is a typical office equipment purchase example:
If you are looking to buy new office equipment such as copiers, printers, IT hardware, or postage machines; you should do so before the year ends. The proposed reforms expected to take effect in 2018 will lower cooperate tax significantly. With tax rates being lower in 2018 than in 2017, you can save considerably by buying assets now since deductions made in this year will be worth more than those in 2018. But even without the changes, the 50% bonus deduction on any amount above the section 179 deduction limit will be phased out progressively from 2018. Therefore, you need to purchase assets before 2017 ends to enjoy the entire bonus.
Don’t wait until the year ends, take advantage and buy your business assets now. We offer the best products in the market at very competitive prices. Do you desperately need office equipment for your business?
Contact Technocom today for any equipment questions and needs.