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Robots Qualify for a 100% Tax Deduction

Industry 4.0



Published on

Sep 14, 2021

Increased innovation in manufacturing technology is on the rise. Not only have top industry professionals recognized this - the IRS has also emphasized the importance of advancing technology, making the decision to allow businesses a 100% tax deduction for implementing CNC automation.

Tax Code 179 Advantages for Equipment

Read Time: 80 seconds

Word Count: 316

Key Takeaway: There are tax benefits in Section 179 that will expire. Take Advantage now!

Recently, the McKinsey Global Institute released a report on manufacturing’s significant impact on the U.S. economy. As of 2021, manufacturing accounts for 8% of the workforce, 11% of gross domestic product, 20% of capital stock, 35% of productivity growth, 55% of patents, 60% of exports, and 70% of research and development investments. However, the industry has fallen behind other countries in the past few decades. Despite many successful attempts to innovate, U.S. manufacturing has experienced a decline in consistent growth and scalability, making it harder to remain a top competitor.

More and more manufacturing companies are innovating using advanced technology to combat this. According to research by the Association for Manufacturing Technology, orders for manufacturing technology rose by 9% from May to June 2021, resulting in a total of $2.5 billion worth of technology for the year's first half. This is a shocking 42% increase since June 2020. U.S. companies attribute this rise in advanced technology to multiple factors. Still, most agree that these investments are simply a sign of the times in the manufacturing industry, where constant innovation is no longer an option.

Robotic automation is the most popular form of investment in innovative technology. The most notable benefits of automation are increased machine utilization and uptime during after-hours operations. These benefits, among others, help the U.S. remain globally competitive with other technologically advanced countries such as China, Japan, Germany, and Russia, which have already implemented robotic process automation.

Not only have most competitive manufacturers recognized this – so has the IRS. The Internal Revenue Service (IRS) has implemented Section 179 of the Internal Revenue Code, which allows U.S. businesses to take a 100% tax deduction for qualified equipment and off-the-shelf software that is put into service by the end of the tax year. This proves what we’ve believed all along: there is no better time to automate than right now.

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