2016 marks a big year of change for laws that have potential to affect many of our drill rig and crawler carrier customers. New laws have gone into effect, and some previous laws are set to be enforced by the end of the year. As your trusted equipment supplier we analyzed these changes to determine how they could affect you. We want our customers to be fully informed so they can continue to make the best decisions and equipment purchases for their growing business.
Section 179 – Bonus Depreciation
First and foremost, are you aware of the latest changes to Section 179 tax deductions for equipment purchases? While Section 179 has been available in the past, the rules have changed. This year both the House and Senate passed “Protecting Americans from Tax Hikes Act of 2015” which permanently increased Section 179 tax deduction limits to $500,000, and extended 50% bonus depreciation through 2019. Prior to this law taking place, Section 179 was temporarily approved on an annual basis. The temporary re-approvals were nice, but they didn’t provide equipment buyers adequate time to complete equipment purchase transactions in time to qualify for the deduction. Therefore, the permanency of Section 179 is ideal for our drill rig and crawler carrier customers seeking to purchase equipment now and in the years to come. The new law gives buyers the time they need to plan and forecast equipment needs, shop for the right equipment, and feel confident the Section 179 tax deduction is going to be there for them.
Oil Export Ban Lifted
Forty years later, the US ban on oil exports has been lifted! This is exciting for our customers within the oil and gas and pipeline industries. It is expected that this lifted ban will expedite a higher demand for the US to grow our oil transport infrastructure, and in return open up thousands of new job opportunities for industry members. Keep in mind environmental protection is still of utmost importance while we grow the US infrastructure so it is imperative for contractors to remain conscious of environmentally friendly practices while on jobsites. Taking action by utilizing heavy equipment like crawler carriers which are known for leaving behind some of the smallest environmental footprint is one way you can help protect the ecosystem.
Tier 4 Emissions Standards
The Environmental Protection Agency (EPA) introduced Tier 4 engine emission standards back in 2004, and has allowed a phase-in period for manufacturer compliance which is largely coming to an end in 2016. The purpose of the Tier 4 engine standards by the EPA is to reduce engine emissions in an effort to comply with stricter Clean Air Act guidelines. What you need to know as an equipment consumer is equipment already utilizing Tier 4 engines also comes with a heftier price tag. Additionally, Tier 4 engines may use different fuel which increases the amount of maintenance required to uphold the equipment. To date, many equipment manufacturers have already conformed to the new Tier 4 engine standards leaving it very difficult to come across Tier 3 equipment still in production. However, there are some manufacturers like Terramac® who are still offer offering Tier 3 models through the remainder of 2016. Therefore, if you are looking to add to your equipment fleet, 2016 may be good year to do so in order to take advantage of Tier 3 options that will soon be no longer be available.
*This is a brief overview of the laws that have potential to affect our customers this year. For more information regarding the details of these laws, please contact your local government agency and tax advisers.
- The Section 179 Deduction. (2016, January 1). Retrieved from http://www.section179.org/
- Speaker Ryan Press Office. (2015, December 15). Lifting the Oil Export Ban: By the Numbers. [Blog Post]. Retrieved from http://www.speaker.gov/general/lifting-oil-export-ban-numbers
- Associated Equipment Distributors. (n.d). Clean Diesel Technology For Off-Road Engines and Equipment: Tier 4 and More. Retrieved from http://www.aem.org/PDF/DTF_Tier4WP_FIN.pdf