While there are a number of benefits to the Tax Cuts and Jobs Act of 2017 for companies, there is a universal theme of “encouraging reinvestment” that seems to be at play. Because of this, there are a few strong incentives to put more revenue producing equipment or projects to work for a lower net investment.
Here are a few of the BIGGER incentives:
• 100% deductions for equipment purchases now reach up to $1,000,000 (from $510,000 in 2017) and begin phasing out at $2,500,000 (up nearly $500,000 from 2017)
• Extension of Section 179 Depreciation benefits to the purchase of used equipment
• Reduction in top line corporate tax rate from 35% to 21% (For C Corporations)
While the top-line tax break is beneficial, all businesses should approach reinvestment with proper analysis. If you determine that growth is your best application of these tax benefits, it is important to strike the right balance with the reinvestment.
With the cost of debt still near historic lows companies can marry the additional cash and depreciation incentives with lower costs of capital to “get more for their money”. While the additional cash position may cover expansion of one product line, responsibly leveraging creative financing might offer additional capacity for expansion. The after-tax cost of revenue-producing assets should of course continue to be a worth while calculation and in some cases now more than ever. This is another area where we may be of assistance.
Whatever a company’s growth plans, acting now may be advisable. With interest rates on the rise for the foreseeable future, making the most of the tax benefits and low interest rates is best acted upon sooner rather than later.
For decades we have helped businesses of all sizes take advantage of opportunities with an uncomplicated approach to financing.
How can we help you grow in 2018 and beyond?