NEW Bonus Depreciation Rules for Small Businesses
If you are looking to purchase new equipment, heavy vehicles, computers or other assets for your business now is the best time to do so. Under the Tax Cuts and Jobs Act the first-year bonus depreciation deduction is generously increased from 50% to 100% for qualifying depreciable assets, but only for a limited amount of time. Small business owners can now immediately deduct the entire cost of the qualifying assets they have acquired and placed into service between September 28, 2017 and December 31, 2022. Assets purchased before the September 28 start date but placed into service thereafter are only eligible for the 50% bonus. After January 1, 2023 the depreciation percentage will decrease 20% each year (2024-80%, 2025-60%, and so on).
Another important change under TCJA is that the bonus depreciation is extended to used qualifying assets, not just new ones.
Purchases of new or used heavy SUVS, pickup trucks and vans which are then placed in service for over 50% business use also qualify for 100% bonus depreciation. Vehicles defined as “heavy” have a gross vehicle weight rating over 6,000 lbs. While passenger vehicles do not qualify for the 100% bonus depreciation, the first-year bonus depreciation limits have been increased as follows:
|
|
Purchased before Sep28/2017 & placed into Service in 2018 |
Purchased after Sep27/2017 & placed into Service in 2018 |
Placed in service in 2018 but bonus first-year depreciation does not apply |
|
1st tax year |
$16,400 |
$18,000 |
$10,000 |
|
2nd tax year |
$16,000 |
$16,000 |
$16,000 |
|
3rd tax year |
$9,600 |
$9,600 |
$9,600 |
|
Each year following |
$5,760 |
$5,760 |
$5,760 |
The above information is of a general nature only and should not be relied upon for specific situations. Click here for additional tax services information.
Call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730 as required to set up an appointment.
