As Houston construction law attorneys, we know that any time contractors purchase equipment that helps them perform their work and maximize their tax savings in the process, this is a win-win situation for everyone. As companies rely on cash flow, smaller companies that may typically be apprehensive about making a significant investment into equipment can take advantage of this tax incentive and grow their business. As we will discuss in this final section, although this is an exciting opportunity for contractors, you need to be mindful of ever-changing tax laws, rules, and regulations that apply in your state.
2017 Tax Laws
As we have discussed in sections one, two, and three of this four-part series, Section 179 deduction is a welcome change to tax laws that impact the construction industry. Before this tax act was passed in late December 2017, the former laws were significantly different. For example, Section 179 used to give businesses the opportunity to only deduct up to $500,000 annually (now one million dollars) on purchased business equipment at a rate of 50 percent deduction (now 100 percent). The spending cap has also increased from a $2 million to $2.5 million annually. Although it’s a good time for tax savings, contractors need to always stay on top of the newest tax laws that could impact their business.
Fluctuating Tax Laws
Several crucial state and federal tax laws change year by year. As we have covered throughout this series, the deduction limit has increased in the last few years and some of these benefits (like 100 percent Bonus Depreciation) will eventually expire. It’s important that contractors consistently visit government sites to ensure they are up-to-speed on the latest tax legislation.
Further, many contractors are working on projects in several states and you may not know that the states you are performing work in have varying tax laws that can also impact deductions. When filing a tax return, you need to consider that their can be significant tax implications dependant on the state you file a tax return in. A Houston construction law attorney knows the tax laws applicable in your state.
Consult With a Tax Expert
Although contractors have the option to fill out their own Section 179 paperwork, we encourage you to contact a Houston construction law attorney to guide you through this process. Our attorneys will not only ensure that your tax form and Section 179 paperwork is in compliance with federal tax laws, but we can also advise you on other ways you can maximize your tax savings for your business.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.