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Section 179 at a Glance for 2018

Tax Incentives for Manufacturing

2018 Deduction Limit = $1,000,000 (one million dollars)

This deduction is good on new and used equipment, as well as off-the-shelf software. To take the deduction for tax year 2018, the equipment must be financed or purchased and put into service between January 1, 2018 and the end of the day on December 31, 2018.

2018 Spending Cap on equipment purchases = $2,500,000

This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis. This spending cap makes Section 179 a true “small business tax incentive” (because larger businesses that spend more than $3.5 million on equipment won’t get the deduction.)

Bonus Depreciation: 100% for 2018

Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached. The Bonus Depreciation is available for both new and used equipment.

Sample Calculation

Equipment:

$750,000

First Year Write-Off:

$750,000

Total First Year Deduction:

$750,000

Cash Savings:

($750,000 x 21% corporate tax rate)

$157,500

Cash Savings:

($750,000 x 35% corporate tax rate)

$262,500

Consult with your accountant for your exact deductions.

***Source https://www.section179.org/section_179_deduction/