My CPA Guy Team

Bonus Depreciation has been a favorite for extra deductions on business vehicles

ByBrandon

2022 is the last year for 100% bonus depreciation for new and used assets purchased and placed in service during the year. The Tax Cuts and Jobs Act increased bonus depreciation from 50% to 100% through 2022 and it will decrease by 20% per year through 2026. The IRS puts limits on how much you can deduct for certain vehicles (Section 179 has limits on them as well). This law however left a beautiful tax saving opportunity for business owners who purchase a truck, van or SUV for their business with a GVW over 6,000 pounds. It can be 100% deducted (limited by business use %) in 2022. Limits are increased for “luxury automobiles” from $10k to $18k for 2022 bonus depreciation. 

If you exceeded the maximum 179 deduction, you can elect to use bonus depreciation for the amounts exceeding 179 limits. 

Similar Posts

  • Timing income and expenses

    ByBrandon

    This can be done for both cash basis and accrual basis tax-payers and has been the go-to tax planning strategy for many, many years. It’s still important to consider how timing will affect future years’ net income.  Cash basis taxpayers can increase deductions by paying their bills in 2022, stocking up on supplies, and taking…

  • Section 179 Expensing

    ByBrandon

    Section 179 may be elected to expense the cost of tangible property such as machinery and equipment purchased and placed in service during the year up to $1.08 million, with a $2.7 million spending cap before reducing the deduction dollar for dollar. The TCJA added qualified improvement property which can be immediately expensed instead of…