As your company wraps up taxes and considers long-term plans for building improvements, it’s important to brush up on the tax incentives that can be utilized to offset the costs of essential safety and security equipment. Thankfully, Section 179 of the IRS Tax Code allows businesses to deduct the full purchase price of qualifying equipment, including fire alarms, safety, and security systems, that were purchased or financed during the tax year.
The Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act (P.L. 115-97), which was signed into law in December of 2017, included significant changes to the U.S. tax code that allowed businesses to deduct the entire purchase price of non-residential building improvements for the current tax year (up to $1,040,000 in 2021). Previously, businesses were required to write off a smaller portion of their equipment costs each year through depreciation, which meant that it took much longer to see the financial benefits.
Fire Protection Systems are Now Eligible for Tax Write-Offs
In addition to the annual deduction cap increase, the changes to tax codes included updates to qualifying expenses. Fire protection systems were not eligible for tax write-offs in the past. Fortunately, thanks to the Tax Cuts and Jobs Act, new and upgraded fire protection and alarm systems, including sensing devices, audible alarms, and heat and smoke detection equipment, are now considered qualifying building improvement purchases.
Does My Business Qualify?
Which businesses qualify under the tax code? Any business that purchased, financed, and/or leased new or “new to you” business equipment (including fire protection and alarm systems) AND put them into service between January 1, 2019, and December 31, 2020 qualify for these deductions. As long as the purchased equipment is used for business purposes more than 50% of the time and has a lifespan of at least one year, it is considered a qualifying purchase. Additional information on property that qualifies can be found here.
It’s also important to note that bonus depreciation is also being offered for the 2020 tax year at 100%. If your business spent more than the current $2,590,000 spending cap on new capital equipment, bonus depreciation can be taken in addition to the Section 179 deductions.
Since tax laws change from year to year, it’s important to fully understand Section 179 and how your business can benefit. More information can be found at the Official Website of Section 179, including this handy deduction calculator that will help you estimate your 2020 tax savings.
Be sure to contact your tax professional to take advantage of this tax write-off opportunity for your new or upgraded fire protection system purchases. Allegiant Fire Protection can work with both you and your tax experts to give your business the best and most affordable fire alarm systems possible.