Tax Benefits Available for Fire Alarm and Security Projects

Share This Page

The pandemic has affected us all in a variety of ways. But did you know the COVID-19 relief package from the federal government allows for tax incentives to upgrade or replace older systems? The 2020 Coronavirus Aid, Relief, and Economic Security Act (CARES Act) has many different tax-savings opportunities for businesses. According to Section 168 of the CARES Act, Qualified Improvement Property (QIP) investments, such as the cost of fire alarm and security systems, can be fully deducted on taxes in the first year it is in service. Previously, companies had to depreciate their QIP investments over several years, all the way up to 39 years for fire alarm installs.

Section 168 Benefits Include:

  • tax deduction on equipment and labor for QIP investments to an existingcommercial or non-residential building; new construction does not count
  • no caps on equipment costs
  • can be applied to purchased -or- leased equipment
  • retroactive to costs incurred as far back as January 1, 2018

Example of How It Works:

Let’s say a building owner installs a new fire alarm system that cost $1,000,000. Prior to the CARES Act, about $25,641 in depreciation deductions could be claimed annually over 39 years, bringing the net equipment cost in year one to $994,616 with a 21% business tax rate. Under the new law, the full $1,000,000 QIP investment can be deducted in year one of service. At a business tax rate of 21%, this saves $210,000 in taxes, effectively lowering the cost of the equipment to $790,000.*

If you are ready to make improvements to your existing fire alarm or security system, IPS is here to help. Contact us today to get your next project started!

*Before making any decision, we strongly encourage any business to consult with their accounting and tax professionals. IPS is not a tax or legal service and cannot be held responsible for any financial, legal, or tax decisions made by our customers. To learn more about the CARES Act, please click here.

Source: Carrier Edwards CARES Act Tax Flyer

Recent Posts

IPS Gives Back in September 2023

A few times each year, our IPS team members like to give back to the community. In September of 2023, we decided to help out …

Read More →
Fire Pump Test

Your One Stop Shop for All Things Fire and Security

IPS is dedicated to creating peace of mind wherever you live, work, and play through customized, innovative life safety and security solutions. We provide safe …

Read More →

IPS Core Ideology

IPS recently put pen to paper surrounding our thoughts on our Core Ideology. These are pretty much the same things we’ve been doing the past …

Read More →
Carbon Monoxide Detector

The Importance of Carbon Monoxide Detectors

Late in 2017, the State of Ohio updated its building codes. With those updates, the requirements for carbon monoxide detectors in overnight occupancies (hotels, senior …

Read More →
Woman Using Access Control System

Holidays Hectic? Access Control from IPS Can Help!

The holidays are a hectic time. If you’re having trouble keeping up with the comings and goings at your building each day, you aren’t alone. …

Read More →
EEN on Tablet

How Cloud Video Can Overcome Traditional VMS Challenges

There are several challenges that come with traditional video surveillance management. A newer technology to the market, cloud video services from IPS and our product …

Read More →