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Looking for End of Year Tax Savings? Take Advantage of the Section 179 Tax Benefit on Your New ERP Software Investment

Industrial Distributors: Don’t miss out on the great Section 179 tax break on your new ERP software investment. This tax break was offered by the Tax Cuts and Jobs Act that was signed into law in 2018 and will remain in effect through the end of 2020. Learn how using this deduction on the purchase or lease of your new ERP software system can help save your company money.

What is the Section 179 Tax Benefit?

Section 179 of the IRS tax code is an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves. It allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. This means if you buy (or lease) a piece of qualifying equipment (think: ERP software, business management software, inventory management software, etc.), you can deduct the full purchase price from your gross income.

Section 179 Deduction Limits for 2020

Section 179 limits were increased in 2020, which allows businesses to write-off up to $1,040,000 of qualified capital expenditures, including software. In addition, the bonus depreciation is 100% and is good through 2022.

The §179 tax benefit means that you

  1. Purchase your equipment and/or software now
  2. Get to take full advantage of the Section 179 deduction in 2020
  3. Get the Section 179 bonus cash as well.

How Section 179 Can Improve Your Bottom Line

These tax benefits should mean a substantial boost to your bottom line this year. But, to get the deduction for the 2020 tax year, you have to act now. Once the clock strikes midnight on December 31, Section 179 can't increase your 2020 profits anymore.

Why? Because the amount you deduct will exceed your cash outlay for 2020 when you combine a properly structured Equipment Lease or Equipment Finance Agreement with a full Section 179 deduction. It is a bottom-line enhancing tool (not to mention, the ROI you’ll get from the new equipment and software you're adding to your business).

Financing new software and/or equipment in the latter part of the year is especially profitable as your cash outlay will be minimal in 2020 and your cash flow optimized in 2021. To determine what your deduction would be, use this handy calculator.

Invest in a New ERP Software Before 2021

Now is the time to invest in your company’s future and take control of your distribution business, while making your company more profitable and efficient. If you are in the market for a new ERP software solution, Tribute, Inc. is here to help.

Tribute has been a provider of industrial distribution management software in the fluid power, motion control, industrial hose, fluid handling, pump, sealing, instrumentation, process control, and automation marketplace since 1980. Our flagship product, TrulinX, is proven to help streamline processes, reduce costs, save time, stay competitive, and improve customer service. With features to help manage inventory in complex fabrication projects, no other software system provides the level of sophistication that TrulinX does in tracking and managing assemblies, subassemblies, and labor and burden down to the component level.

Learn more about our expertise and how TrulinX software can benefit your organization.

Author

Lorna Henderson

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Tribute, Inc. is a provider of ERP business management software for distributors and system integrators in the fluid power, hose, motion control, automation, fluid handling & pump industry who provide value-added services.