In December 2015, Congress passed the Protecting Americans from Tax Hikes Act, also known as the PATH Act. The bill’s purpose was to strengthen certain deductions and credits and also to make a few temporary deduction opportunities permanent. Among the included tax breaks was the Section 179 deduction opportunity for businesses that invest in new equipment. The PATH Act raised the deduction cap to $500,000 and also made the deduction permanent.
What does Section 179 Mean for Your Business?
Section 179 allows you to deduct up to $500,000 for equipment purchases in any given year. It also allows you to depreciate up to 50 percent of the purchase price above the cap. For example, if you bought a $700,000 piece of equipment, you could deduct $500,000 for the purchase and another $100,000 as 50 percent bonus depreciation for the remaining $200,000 above the cap.
While this deduction is frequently used for equipment and machinery, it can also be used for software; manufacturing software and ERP software included. The only requirement is that the software must be entirely for business purposes, it must be financed or purchased outright by you, it can’t be custom-coded or heavily modified for your shop, and it must have an expected life of more than one year.
That means that if you have been considering machine shop software and have room left under the $500,000 Section 179 cap, now may be the time to move forward with the purchase. There’s still time to get it implemented by the end of the year, especially with Shoptech Software’s industry-best implementation support.
The Section 179 deduction essentially provides a discount on your manufacturing shop software purchase. If you were already considering software for your shop, why not move forward now? If the holidays are generally slow for your shop, you could use the time to input data and train your team on the new platform.
Now Is the Time to Take Advantage of the Section 179 Deduction
Make the end of the year a productive period for your shop. Take advantage of the Section 179 deduction. Train your team on your new system. And implement a manufacturing software or ERP software platform that will help you improve efficiency, eliminate waste, increase quality, and boost your bottom line.
The E2 Shop System consultants here at Shoptech welcome the opportunity to discuss your goals and needs. Let’s connect soon and start the conversation.