CARES Act Delivers New Fire Sprinkler Tax Incentives
Tucked within the CARES Act (passed by Congress this past March), there was a provision that corrected a 2017 drafting error that limited the ability for businesses to write off the full cost of commercial fire sprinkler systems (at that time up to an expense of $1.04 million).
The original 2017 legislation enabled many small businesses to immediately recover the costs of the upfront investment and even interest expenses on a system in the event of a loan. However, the legislation left out many larger businesses from the benefit, many of which typically incur the highest sprinkler system costs.
With this error corrected, any size business can deduct 100% of the cost of a sprinkler system installation (retrofit or upgrade). To be eligible, the equipment must be put into use after September 27, 2017 and prior to January 1, 2023.
You are encouraged to read this article for more information and to talk further with your accountant(s) to understand how this may benefit any fire safety improvements you may have planned in 2021.