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Facility Managers: Deduct 100% of a New Generator via the 2020 CARES Act

Some much-needed good news for facility managers: the 2020 Coronavirus Aid, Relief, and Economic Stability (CARES) Act now allows your company to completely write off a new generator purchase in 2020 and beyond. 

So if your old industrial generator’s been a hassle but you aren’t sure if now’s the time to spring for a new one, rest assured. It is. 

To understand why, here’s a summary of the pre-CARES Act facility upgrade deduction system and how the CARES 2020 Act changes it for the better:

How Pre-CARES Generator Deductions Worked

Businesses did get generator tax deductions for the project costs of facility upgrades (such as installing a new generator) before the 2020 CARES Act.

However, this write-off occurred over 39 years, with a 2.5% tax deduction each year. 

How CARES Act 2020 Generator Deductions Work

Now, Section 168 in the CARES Act states that qualified improvement properties (QIP) may write off 100% of certain facility improvement costs within a single year — no 39-year wait for the full tax benefit. 

CARES Act Generator Deduction F.A.Q. 

1. Who Qualifies for the CARES 2020 Facility Improvement Deduction? 

QIP businesses include almost all non-residential properties. Some examples include, but are not limited to: 

    • Hospitals and healthcare facilities
    • Office buildings
    • Factories and plants
    • Logistics facilities
    • Other non-residential buildings

So it’s very likely that your business qualifies for the full accelerated generator tax deduction.

2. What Projects Qualify for the Accelerated Deduction? 

Qualifying projects include the equipment and installation costs of most non-structural upgrades: 

    • Building management systems
    • Sensors, valves, actuators, and other HVAC devices
    • (Duthie’s speciality) Uninterruptible power supplies, switchgear, and other electrical distribution equipment (including generators)

There is no limitation on the size or cost of the project, so you can install an emergency backup system as powerful as your business needs while getting the entire project cost written off within the year. This includes the entire equipment and installation costs of a generator, automatic transfer switch, and upgraded electrical panels.

3. What’s the Possible ROI (Return on Investment)? 

Generally, modernization and energy efficiency upgrades pay for themselves within a few years. An analysis of customer projects by one of our partners, Schneider Electric,  reveals that similar projects have an average ROI of 5.3 years. 

Section 168’s amendment now allows businesses 21% cash savings in addition to their usual cost savings from installing more efficient equipment. While it’s different for every business, this natural gas generator tax credit should result in dramatically faster ROI’s for most facilities.

Although COVID-19 has brought difficult times to everyone, the CARES Act provides a small silver lining to facility managers: the perfect time to invest in a better generator. 

Want to take advantage of CARES’ accelerated generator project write-off? Our team is experienced in finding and installing the right generator, at the right cost, for California businesses. 

Call 1.800.899.3931 or contact us online at Duthie Power for a no-pressure consultation with a generator expert on the best backup power options for your facility.


We are the generator experts, not the tax experts! The above article is for information purposes only and should not be taken as financial advice. Consult a tax professional for more information on generator tax deductions.

Before making major financial decisions, always discuss your options with a CPA.

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