We get asked all the time “Do warehouse shelving systems qualify for Section 179?” Or what about pallet racks, cantilever racks, and/or mezzanines? The answer is an emphatic YES – warehouse racks and similar ARE Section 179 eligible. And it can make a BIG difference in your 2020 bottom line.
If you don’t know what Section 179 is, it’s the business tax deduction that allows companies to depreciate/deduct the FULL purchase price of business equipment from their taxable income. Until Section 179 came around, companies could depreciate a little bit every year. But with Section 179, bam, they can deduct all of it.
For 2020, the Section 179 deduction is $1,040,000. This means you can purchase slightly more than a million dollars worth of eligible equipment, and deduct it all. This is an excellent tax deduction, and can make purchasing needed equipment (like pallet racks, mezzanines, cantilever racks, and so on) much easier.
“Do warehouse shelving systems qualify for Section 179? Yes they do!”
To give you a quick example, say you purchase and have installed a large mezzanine for $50,000. You deduct that right from your taxable income. At a 35% tax rate, that would come out to $17,500 less in taxes that you pay. You can look at this several ways – the mezzanine cost you $17,500 less, or your bank account grew by $17,500… however you look at it, these are real dollars that stay in your pocket instead of going to the IRS.
If you wish to see how much you can save, the Section179.org website has an excellent Section 179 calculator you can use for free. It’s right here: https://www.section179.org/section_179_calculator/.
Almost all material storage and handling equipment and warehouse racking systems are Section 179 eligible. As long as it’s not a permanent part of the building (which we never recommend anyway), you’re good. Of course, ask your accountant for details, as there are some other factors (like your business needs to have taxable income in the first place.)
One other piece of good news is Section 179 is unaffected by any other government program or such. So for 2020, if you got a PPP loan or similar, you can still use the Section 179 deduction on warehouse shelving systems.
Definitely factor Section 179 into your plans, for 2020 and beyond. It makes a difference.