The last few weeks have been an exciting and highly anticipated transition for the Wipfli office in Eau Claire, Wisconsin. We have finally moved into our new office building. We were beginning to feel the constraints in our old office as our firm grows and we continue to hire new talent for our team. After much thought and deliberation, it was decided we needed more space, so the process of planning and constructing a new office began. A team was formed to manage the construction process for the new space. Part of the team’s responsibility was to evaluate what furniture, fixtures, and equipment could be salvaged from the old location and what should be purchased new.
Your organization may be going through a similar transition of sorting through current equipment to determine what is still useful or deciding to upgrade to the latest model. Similar to the Wipfli Eau Claire office, you may have outgrown your current space and may be considering building a new location or remodeling your existing location. Regardless of the extent of purchasing you are doing or thinking about doing, there may be some tax savings in your future.
Under the Tax Cuts and Jobs Act (TCJA), signed into law on December 22, 2017, businesses can immediately expense eligible property and receive tax savings in the first year. Under the new law, the maximum deduction for Section 179 expense increased from $500,000 to $1 million. The phaseout threshold also increased from $2 million to $2.5 million. The new law expanded the definition of Section 179 property. The TCJA also increased the first-year bonus depreciation percentage from 50% to 100% for qualified property placed in service after September 27, 2017, and before January 1, 2023. The definition of bonus-eligible property was expanded to included used qualified property, whereas prior to the TCJA, only new property was eligible for bonus depreciation.
With any new tax laws, there are always rules and exceptions to the rules. If you are thinking about purchasing a large amount of equipment or expanding your current location, contact your Wipfli tax advisor to discuss your opportunities for tax savings.