2005 Tax Incentives
New tax laws for manufacturing companies
USE TAX SAVINGS TO MAKE YOUR PAYMENTS
First years tax savings could exceed first years machine payments! Equipment leases that include a $1.00 purchase option qualify for the federal section 179 deduction and regular depreciation. Companies may also be eligible for additional state and local tax deductions plus interest deductions. Companies purchasing equipment now could see their tax savings cover their first year's payments!
$105,000 WRITE-OFF
Section 179 Federal Income Tax Deduction: This deduction allows a company to deduct the first $105,000 of equipment (Section 179 Property) purchased in 2005 from their taxable income. For companies purchasing (or leasing - with a $1.00 buy out lease) up to $420,000 of equipment in 2005, this deduction is available in full. It then phases out on a dollar for dollar basis between $420,000 and $525,000 and it is not available for companies purchasing over $525,000 of equipment in 2005. However, companies can finance purchases over $420,000 with an operating lease and may still be able to claim this deduction.
STANDARD APPRECIATION
Additionally, companies can take their standard depreciation deductions on the adjusted basis of qualified equipment. Machine tools and fabricating equipment are typically depreciated over 7 years.
Here's another example: A manufacturing company acquires a new machine for $175,000 and is eligible for the $105,000 federal section 179 write-off plus standard depreciation. Under the current law, the company may write off $115,003 the first year - over 60% of the machine cost!
Always check with your accountant or financial advisor to verify tax or accounting issues & any tax benefits.
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