The Tax Cuts and Jobs Act (H.R. 1) that was signed into law on December 22, 2017, included important changes to the U.S. tax code providing incentives for businesses to invest in new fire protection systems. These incentives were part of the broader effort to produce long-term economic growth by encouraging business to make capital investments.
Deduct the Cost of a New Fire Protection System
Previously, the cost of commercial-use fire protection systems had to be capitalized and depreciated over a number of years. But beginning in 2018, Section 179 of the new tax law allows small to medium-size businesses to write off the total cost of a new fire protection system for the tax year it was placed in service. This now eliminates the capitalization requirement.
For the first time, qualifying businesses can deduct the costs of new fire protection system, up to a total of $1 million under Section 179 of the new law, despite being considered building improvements. The law also increases the amount of qualified purchases a business can expense to $1 million. This is double the previous amount of $500,000. This deduction phases out on a dollar-for-dollar basis after a business has $2.5 million in total qualifying purchases, reaching zero at $3.5 million. After 2018, the increased limit and phase out threshold are indexed to inflation.
Disclaimer: The information included here is intended for general information only and is not intended to be tax or legal advice. Please consult your tax professional before making business decisions that could affect your tax situation. Each business situation is different and tax regulations change frequently.