Act Fast For Bonus Depreciation On Coating Equipment

If you’re planning to purchase new powder coating or painting equipment, this is a great year to save money with tax incentives, especially if you want to take advantage of bonus depreciation benefits that are decreasing each year and will be phased out after 2026. These same savings apply to industrial ovens.

In both the U.S. and Canada, businesses can benefit from generous tax deductions that reduce their tax burden.

U.S. Tax Incentives

Section 179 Deduction

  • Deduct up to $1,220,000 of qualifying equipment purchased in 2024.
  • Applies to a variety of pretreatment, coating, and curing appliances.
  • The maximum deduction applies to total purchases up to $3,050,000.

Bonus Depreciation-Section 168(k)

  • Deduct 60% of the remaining cost of equipment beyond Section 179 limits.
  • Bonus depreciation is an “act now” opportunity that will be less beneficial in 2025 and 2026, and will be phased out after 2026.

Example for 2024:

  • Equipment: A $1,500,000 turn-key finishing system
  • Section 179 Deduction: $1,220,000
  • Bonus Depreciation (60%): $168,000
  • Total First-Year Deduction: $1,410,400
  • Tax Savings (at a 21% tax rate): $291,480!

Canadian Tax Incentives

Capital Cost Allowance (CCA)

  • Deduct up to 100% of certain new equipment costs under specific conditions.
  • The Accelerated Investment Incentive allows up to three times the normal depreciation rate in the first year.

Example:

  • Equipment: A $100,000 curing oven
  • Standard Deduction: $30,000
  • Accelerated Deduction: Up to $90,000

What Else Do You Need To Know?

  • Equipment must be primarily for business use.
  • In the U.S., it is important to conclude sales transactions and place equipment in service by end-of-year deadlines to qualify for appropriate benefits.
  • Leased or financed equipment may qualify. 
  • Businesses should consult a tax advisor to ensure maximum savings.

Reliant Can Help!

With bonus depreciation phasing out, now is the time to invest in capital equipment and take advantage of a temporary situation that benefits businesses of all sizes. Call Reliant Finishing Systems at 256-355-9000 and let our specialists help you determine the best solution for your finishing or thermal processing needs.