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Major Tax Incentive for New Equipment Purchases |
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If you think you can’t afford new materials testing equipment? Think again. New tax incentives mean huge savings on new equipment New Tax Break for Capital Equipment The economic stimulus package signed by President Bush in March 2002 allows companies to write off new equipment more rapidly and therefore provides an immediate cash benefit. Combined with existing tax benefits for equipment purchases, the stimulus plan’s 30% depreciation bonus means as much as half the cost can be expensed in the first year! In a tight economy, many companies struggle to conduct product development and quality operations with inadequate or antiquated testing equipment. But as customers demand higher performance and higher quality, advanced testing equipment is essential to delivering competitive products. Thanks to today’s new tax laws, investing in this equipment has never been more attractive. Major Tax Incentive for New Equipment Orders Congress has passed President Bush’s economic stimulus bill, which contains a new 30% expensing allowance for new machine tools and other equipment ordered between 9/11/01 and 9/11/04 and placed in service by 12/31/04. Here’s how the provision works: Lets assume that the Peekless KeyHole Co.* orders a machine tool costing $100,000. Peekless can write off 40% of the asset in the first year and 57% over two years (compared with 14% and 39% under the old law). This adds up to a first year tax cut of $9,100 on a $100,000 machine and a 2.5% reduction in the cost of capital.
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| *Example assumes customer is in seven-year asset depreciation class. For customers in the five-year class, the first year tax savings is $15,400 on a $100,000 machine and the tax cut is $8,400.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||