Understanding the Tax Benefits of Upgrading Your HVAC System Under the Tax Cuts and Jobs Act of 2017

The Tax Cuts and Jobs Act (TCJA) of 2017 brought significant changes to the U.S. tax code, offering various incentives for businesses to invest in their infrastructure. One of the key provisions that directly benefits commercial building owners is the ability to immediately expense the cost of HVAC products under Section 179. This provision has made upgrading HVAC systems more financially attractive, offering both immediate and long-term savings.

What is Section 179?

Section 179 of the U.S. tax code allows businesses to deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year. This deduction is intended to encourage businesses to invest in their operations by allowing them to write off the entire cost of certain assets upfront rather than depreciating them over several years.

How the New Tax Law Benefits HVAC Upgrades

Prior to the TCJA, HVAC systems were typically considered to be a capital improvement, meaning their cost had to be depreciated over a period of 39 years. However, with the enactment of the TCJA, HVAC products now qualify for immediate expensing under Section 179. This change allows businesses to deduct the full cost of new HVAC systems in the year they are purchased and installed, providing a significant tax break.

This immediate expensing can drastically reduce the upfront costs associated with upgrading HVAC systems, making it easier for businesses to invest in energy-efficient technology that can lower operating costs and reduce energy consumption.

Why Upgrade Your HVAC System?

Upgrading your HVAC system is not only beneficial from a tax perspective but also offers several operational advantages:

• Energy Efficiency: Newer HVAC systems are far more energy-efficient, reducing your building's energy consumption and lowering utility bills.
• Improved Air Quality: Modern HVAC systems can provide better air filtration, leading to improved indoor air quality and a healthier environment for employees and customers.
• Reliability: Upgrading to a new system reduces the likelihood of unexpected breakdowns and costly repairs, ensuring consistent climate control and comfort.
• Environmental Impact: Investing in energy-efficient HVAC systems contributes to reducing your building’s carbon footprint, aligning with sustainability goals.

Take Advantage of Section 179

For commercial building owners in New Jersey, the combination of state incentives like the EcoWise Rebates program and the federal tax benefits of Section 179 makes now the perfect time to consider upgrading your HVAC systems. By taking advantage of these programs, you can significantly reduce your initial investment costs and enjoy the long-term benefits of a modern, efficient HVAC system.

If you're considering an HVAC upgrade or want to learn more about how you can benefit from the Tax Cuts and Jobs Act of 2017, visit EcoWiseRebates.com or contact us today. We’re here to help you navigate these incentives and make the most of your energy efficiency investments.