What's New for 2018?
Under the new law, businesses may choose to expense the cost of any section 179 property and deduct it in the year the property is placed into service. The new law also increased a business's maximum deduction from $500,000 to $1,000,000 and the total "phase-out threshold" from $2 million to $2.5 million.
The Tax Cuts and Jobs Act of 2017 also expands the definition of "property" to include improvements made to non-residential real property (i.e. office buildings, etc) like an expansion of the building, an elevator or escalator, or changes to the internal structure as well as roof, HVAC, fire protection, alarm system, and security system work.
The new law also increases the bonus depreciation percentage from 50 percent to 100 percent for qualified property that was bought and placed into service after January 1, 2018 but before January 1, 2023. The new law also changed the depreciation limits for passenger vehicles that were placed into service after December 31, 2017.
One big change is that the Tax Cuts and Jobs Act of 2017 allows for the 100 percent bonus depreciation to be applied to used qualified property, as long as certain qualifying factors apply.
How Section 179 Can Help Your Small Business Deduct Vehicles
Many small businesses can invest in new equipment, including vehicles, and can write off up to $1 million of those purchases on 2018 IRS tax returns. Usually, small businesses choose to spread the deduction of the purchase prices over several years. Because of the changes made to Section 179 and the tax code, you can now deduct up to $1 million of qualified new equipment in the FIRST YEAR that equipment is placed into service for your business.
For example, you may be able to write off the entire cost of a Super Duty or a Transit Cargo Van or up to $18,000 of a Transit Connect Cargo Van. The amount you can deduct depends on the type of vehicle, which is often determined by its weight. See IRS guidelines for the specific amounts. Now that you can also use the 100% bonus depreciation on used qualified property, you may be able to stretch your budget further by opting to purchase certain qualified used trucks or SUVs from Gator Ford.