New Tax Law Allows 100 percent deduction for HVAC and Solar project equipment
On December 15, 2017, the Federal Tax Cuts and Jobs Act was passed, reforming the tax code to lower tax rates on wages, investment, and business income.
The law went into effect starting in 2018, and includes two key changes to business taxes that significantly benefit owners who have been considering capital investments for solar, HVAC, or other mechanical equipment.
Specifically, the new law:
- Lowers the corporate income tax rate permanently to 21 percent, starting in 2018.
- Allows full and immediate expensing of short-lived capital investments for five years.
- Increases the section 179 expensing cap from $500,000 to $1 million.
For those considering solar power, a solar power installation can now be written off at the full 100% cost within one year, compared to the prior depreciation rate of 50% in the first year. Download the Tax Law Fact Sheet for Solar.
For those considering HVAC or other mechanical equipment upgrades, these higher deduction rates mean the entire cost of a new system can be written off in the first year. Download the Tax Law Fact Sheet for HVAC and Mechanical Equipment.
All businesses that purchase, finance, and/or lease less than $2,500,000 in new or used business equipment during tax year 2019 should qualify for the Section 179 Deduction, which offers building owners a significant incentive to consider making these capital improvements in 2019.
Plus, a variety of financing options are available, including those with no up-front or out-of-pocket costs. The self-funding option takes advantage of this new tax law, allowing companies to write off 100% of the capital costs of in the first year.
Download the Solar or HVAC Fact Sheet for more details, and to talk with an expert, contact:
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