American Recovery and Reinvestment Act of 2009 helps businesses save 35% on Equipment Purchases

Washington recently passed the American Recovery and Reinvestment Act of 2009.  One provision in the act allows qualifying businesses the option to expense the entire cost of business machinery and equipment purchases in one year, instead of depreciating the costs over the life of the equipment. 

 Here’s an illustrative example of how this can help save you money this year:

 If your business has $150,000 of pre-tax profit for the year you will likely be taxed $52,500 (assuming a 35% tax rate).  

 If you were to purchase $50,000 of qualifying equipment under this provision your taxable income would be $100,000 and be taxed $35,000 (assuming the same 35% tax rate).  

 This saves you $17,500 in taxes or 35% off the price of the equipment.

 If your business does not qualify for this equipment expensing election you may be able to take advantage of Bonus Depreciation which generally equals 50% of the cost of qualified property in the year assets are placed in service.  This option can also save you money on your equipment purchases.

 Keep in mind that equipment refurbishments are 100% tax deductible and are not considered capital purchases.

 Disclaimer:  We are truck equipment experts, not tax experts and do not provide tax advice.  Please contact your accountant for further information.

 Call 800-758-2410 for any IMT equipment or to inquire about Miller Welding’s revolutionary product, the EnPak.