Will the New Tax Law Affect the HVAC Business?
The Tax Cuts and Jobs Act of 2017, signed into law on December 22, 2017, made several changes for small business owners and possible deductions. While most of the changes may not directly address the HVAC business or energy efficiency in general, one provision relating to asset expensing raised commercial business deductions for HVAC systems up to $1,000,000. Lowell Ungar at American Council for an Energy Efficient Economy (ACEEE) explained:
[The Bill] expands business expensing by raising the cap on deductible business investments to $1 million, and makes HVAC equipment and roofs installed in commercial buildings eligible. Although businesses depreciate, or capitalize, most investments over a number of years, they can expense investments including computers and equipment—and now HVAC systems and roofs—up to the cap, deducting the full cost from taxable income in the first year. Unlike in the earlier House-passed bill, there is no efficiency requirement, but the new equipment and roofs will generally be more efficient.
This expensing change may spur additional commercial investment in advanced HVAC technology in 2018. For more information about how the tax law may affect your business, MarketWatch provided a great primer: https://www.marketwatch.com/story/top-10-tax-changes-for-business-owners-2017-12-29.
Note: Air Northwest, Bonneville Power Administration or its affiliated organizations do not provide tax advice.