YEAR END 2023 SUV DEPRECIATION EXPENSE AND BONUS DEPRECIATION

YEAR END 2023 SUV DEPRECIATION EXPENSE AND BONUS DEPRECIATION

If you’re a Small Business Owner looking for tax strategies for the end of the year and considering a year end SUV purchase, you might be interested in the following:

*   Section 179: This is a tax deduction that allows businesses to deduct the cost of machinery and qualifying equipment when filing their taxes. This could be office furniture, technology, supplies, and other tangible items. This includes vehicles such as heavy SUVs with a gross vehicle weight rating (GVWR) between 6,001 and 14,000 pounds. For the 2023 tax year, the maximum Section 179 depreciation deduction for heavy SUVs is $28,900. For the 2024 tax year, that limit increases to $30,500 ²³.

*   Bonus Depreciation: This is a tax incentive that allows businesses to immediately write off a significant portion of the purchase price of eligible business assets. According to Internal Revenue Service (IRS) rules, this deduction is available in the first year the asset is placed in service. For a while, businesses could write off 100% of the cost of eligible property. However, bonus depreciation is scheduled to phase out thanks to the Tax Cuts and Jobs Act of 2017 (TCJA). For 2023, businesses can take advantage of 80% bonus depreciation. In 2024, the bonus depreciation rate will drop to 60%, falling by 20% per year thereafter until it is completely phased out in 2027 (assuming Congress doesn’t take action to extend it).

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