More details are coming out on the huge deal made in Washington to keep America from falling off the fiscal cliff. One of them was a significant tax deduction on equipment purchases made during 2013 that will make a real difference with fleets. Included in the tax deal is an extension of the “bonus deprecation” that had expired on Dec. 31. This allows equipment purchasers to write off one half of the cost of new equipment in a single tax year.
For TEC Equipment Inc. of Portland, Ore., a seller of medium- and heavy-duty trucks, it’s bringing optimism to their business plan for the new year. Sales were steady at TEC dealers in California, Nevada, Oregon, and Washington in the second half of 2012, but a lot of the sales activity was hindered by setting off purchases due to economic uncertainly. Now they’re likely to be more open to vehicle purchases, with the depreciation incentive offering a real bonus. TEC sells Hino and Isuzu medium-dutry trucks and GMC light commercial trucks. The company also has a truck rental and leasing division, and under the new tax bill, TEC can also deduct 50% of the purchase price of new trucks for that side of the business.
A federal bonus depreciation programs had been enacted in 2010 to help the manufacturing sector recover. Under that action, during the 2011 tax year, equipment buyers could write off 100% of their purchase cost that year, and it dropped to 50% in 2012 and was set to expire with the new year. Keeping the 50% write-off is thought to probably spur truck sales this year, since the tax break takes some of the concern away about the higher cost of more fuel-efficient trucks. It “takes some of the sting” away from these acquisitions, says Richard Witcher, chairman of American Truck Dealers and CEO of Minuteman Trucks, a light- and medium-duty truck dealership in Walpole, Mass.
