Manufacturers in the USA | Blog

Did you know that USA-based Small and medium-scale (S&M) businesses, can save large chunks in tax?

Thanks to section 179, S&M businesses are or could be eligible to save tax money by either purchasing or financing specific equipment. This can help manufacturers upgrade to automation, save money, and utilize it to invest in the growth of their business.

What is Section 179?

Section 179 is a tax code, from the United States IRS, that allows manufacturers to claim and deduct the total PURCHASE PRICE of any equipment/software purchased, or financed from their gross income for the tax year. Its two main restrictions are that the equipment in question has to be installed and it needs to be in operation. The deadline for installing and putting this equipment or off-the-shelf software is the end of December 2021.

Eligibility criteria

This benefit is only applicable to small and medium-scale businesses. To ensure this limitation, the maximum purchase limit cap is $3,670,000. Any industry spending more than the limit cannot qualify.

Most of the equipment, off-the-shelf software, and business-use vehicles are covered under this scheme. This, of course, includes automation supplies like our DIY Robotics Cells. Businesses are also eligible to get a non-tax capital lease up to the deduction limit without having to pay any amount in 2021. The US government has made a dedicated page for detailed information which can be accessed on section179.org.

All this can help S&M businesses capitalize on their hard cash and minimize their out-of-pocket expenses. Businesses, if eligible, can get up to 100% tax deduction.

How tax savings can amplify automation in S&M Businesses

Currently, S&M businesses don’t spend as much on automation as large-scale businesses. One of the main reasons is that automation doesn’t come cheap. This creates a gap between the profits and turnovers of large and S&M businesses. Section 179 acts as the bridge to fill this gap. It empowers manufacturers to run their businesses to maximum capacity.

This can help improve their production in quantity/quality and allows S&M businesses to utilize their money to fulfill other requirements without compromising on automation. Manufacturers can utilize their manpower more effectively with automation under the roof. It ensures better OEE, quick ROI, and various peripheral or tertiary benefits. It also enables S&M businesses to scale up when facing large-scale businesses in the competitive market.

The US government has created a great path to help small and medium-scale businesses. Manufacturers need to make the most out of section 179. It will enable them to compete fairly in this ever-growing market. Moreover, manufacturers can automate their businesses and even save their hard-earned money. So, what are you waiting for? If you were thinking of automating but haven’t made the move yet, know that our Robotic Cells are plug-and-play and deliverable within 3 weeks. This means you can have them in operation before the final deadline if you ORDER NOW.