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Tax Incentive on Automation Equipment




You have two opportunities to save money right now with the purchase of a motorized drive roller (MDR) system.  You’ll not only see a significant reduction in energy consumption from your conveyor system, you’ll also benefit from the hefty tax deductions you can take on capital expenditures through the American Recovery & Reinvestment Act of 2009.


1. Save With The 2009 Tax Incentives

The new and improved Internal Revenue Section 179 is one of the best business tax breaks we’ve seen in a long while.  However, you only have until December 31, 2009 to purchase, install and place qualifying equipment into service. So if you’re thinking about purchasing an MDR system to improve operational efficiency, it’s time to act.  Insight Automation can still specify, install, test and implement your system before year end. But don’t delay—the tax benefits drop significantly in 2010.

These capital expenditure tax incentives, which began in 2008, have been considerably increased for 2009.  Section 179 of the Economic Stimulus Act gives businesses incentive to invest in qualifying equipment by allowing you an additional depreciation deduction on equipment investments this year.  The allowance is an additional deduction of 50%, in addition to the standard depreciation known as MACRS (Modified Accelerated Cost Recovery System).

For commercial taxpayers who have qualifying business equipment may be able to deduct up to $250,000 of the value of the equipment with a cap on the amount of equipment of $800,000.  (In 2010, the deduction is reduced to $128,000 on equipment purchases up to $510,000.)

Here’s an example of how much you could save this year on a new conveyor system purchase totaling $150,000:


Equipment Purchase:      $150,000

1st Year Depreciation (50%):                   $75,000

Regular Depreciation (14%) on Remaining Property Basis of $75,000:     $10,500

Total 2009 Deduction* on $150,000 equipment purchase:        $85,500


Additional Expensing for Small Businesses:

Small businesses can also expense the first $250,000 for 2009 tax year on new equipment purchases up to $800,000.  The 50% bonus depreciation applies to the remaining property basis.



Equipment Purchase (max. $250,000 exp.)     $425,000

1st Year Depreciation (50%) on Remaining Property Basis of $175,000:  $87,500

Regular Depreciation (14%) on Remaining 1st Year Basis of $87,500:     $12,250

Total 2009 Deduction* on $425,000 equipment purchase:     $349,750


*Examples assume 7-year asset depreciation. Consult your financial advisor for specific qualifications.

You’ll need to check with your tax advisor to determine if you qualify for these types of deductions.  However, the savings you can reap from investing in capital equipment this year are substantial.


2. Save Through Reduced Energy Consumption

Saving energy is another important topic right now.  Another way to save on a new conveyor system is through Motorized Drive Roller (MDR) technology from Insight Automation.  Traditional conveyor rollers are constantly running, using up energy even when the conveyor is not in use. MDR conveyor rollers have their own internal motors and only when needed.  Additionally, each roller controls a small zone of free-turning rollers. This segment is typically as long as the length of your shipping container so only the necessary rollers are supplied with electricity.  Our efficient gearbox design also reduces energy because it requires less torque for operation. As a result, rollers can drive more weight using less torque.

MDR conveyor sections are inherently modular, both mechanically and electrically.  Instead of having a single 100-ft. accumulation conveyor with a big 5HP, 480-v gear motor and its own air feed drop, you can now have 10 sections of 10-ft. modular accumulation conveyor that easily connect.  You don’t need air piping, and your power source can be as simple as plugging into a standard 120-v household wall receptacle.

These numerous energy-saving factors can reduce conveyor system energy use by up to 70%.  


A New MDR System Can Pay For Itself

Between the improved tax incentives and the energy savings, a new MDR conveyor system will quickly pay for itself.  In addition, you’ll realize improved productivity, efficiency and other operational savings.

Ask Insight Automation for a quote tailored to your facility requirements.  We’ll do our best to get you up and running by the December 31st deadline so you can take advantage of the 2009 tax incentives.


Two Recommendations:

*Recommend using this subhead as an art element somewhere near article:

Act Now: To Benefit From 2009 Tax Incentives, New Equipment Must Be Placed Into Service Prior To 12/31/09

*Consider adding an inset box  with a calculation that shows how the more efficient gearbox requires less torque:  improved gearbox drives more weight with less torque = reduced energy use