In Need of a Major Upgrade? Now May be the Time to Invest

March 28th, 2018 by Trey Barrineau

The tax-reform bill that was signed into law at the end of 2017, known as the Tax Cuts and Jobs Act (TCJA), was one of the biggest changes to U.S. tax law in a generation, and it has many attractive provisions for the window film, paint protection film (PPF) and vinyl industries. If you’re in the market for a new printer, plotter or software, now may be the time to make the investment.

Source: U.S. Senate Committee on Finance

For the big players, the corporate tax rate was dropped from 35 percent to 21 percent. Smaller companies set up as so-called “pass-through” businesses (companies whose owners pay taxes at individual rates) get to deduct 20 percent of the first $315,000 of earnings. “Pass-throughs” represent about 95 percent of the 26 million businesses in the U.S.

But one provision of TCJA could have a major long-term effect, regardless of company size.

The law allows businesses to write off the full cost of new equipment immediately upon purchase for the next five years. After January 1, 2023, however, the percentage of the expense eligible for immediate deduction would begin to phase out on a year-over-year basis. Before the bill was enacted, the system only allowed these expenses to be written off over an extended period of time through depreciation and amortization deductions.

Additionally, the popular Section 179 deduction for capital expenses will rise from $500,000 to $1 million, with a limit of $2.5 million. (Section 179 of the IRS Code was designed to allow small businesses to take a depreciation deduction for certain assets in year one, rather than stretching them over a longer period of time.)

Companies large and small will be able to take advantage of the tax-reform bill by purchasing new equipment. Will your company?

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    Katherine Coig contributed to this article. 

    This article is from Focus on Film, the weekly e-newsletter that covers the latest news regarding window film and related products, including paint protection film. Click HERE to sign up—there is no charge. Interested in a deeper dive? Free subscriptions to Window Film magazine in print or digital format are available. Subscribe at no charge HERE.

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