How The New Tax Law May “Drive” Your Decision Making

The Tax Cuts and Jobs Act revamped tax depreciation in several ways, one in particular being the way vehicle depreciation limits are calculated. Below is a summary of the vehicle depreciation limits prior to the new tax law vs. the vehicle depreciation limits under the new tax law. Please note that the new limits apply to vehicles placed in service after December 31, 2017.

TYPE OF VEHICLE LIMITATIONS – FIRST YEAR (OLD LAW) LIMITATIONS – FIRST YEAR (NEW LAW)
Passenger Cars (Under 6,000 lbs) $3,160 (If bonus does not apply)
$11,160 (If bonus does apply)
$10,000 (without bonus)
$18,000 (with bonus)
Passenger Trucks and Vans (Under 6,000 lbs) $3,560 (If bonus does not apply)
$11,560 (If bonus does apply)
$10,000 (without bonus)
$18,000 (with bonus)
Trucks, Vans, and SUV’s (Between 6,000 and 14,000 lbs) Limited to 25,000 Section 179 deduction + 50% Bonus Limited to $25,000 Section 179, however 100% bonus may be taken
Trucks, Vans and SUV’s (Over 14,000 lbs) No Section 179 depreciation limitations No Section 179 depreciation limitations

 

As summarized above, the new tax law has provided greater incentive for the purchase of business use vehicles. These limits apply for vehicles that are 100% business use.

For more information on this topic, please contact Tony Mueller, CPA at tmueller@bwtpcpa.com or 314-576-1350.

Anthony (Tony) Mueller, CPA is an accountant with BWTP P.C. Read more about Tony here.

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