The Tax Cuts and Jobs Act of 2017 made hundreds of changes to the U.S. Tax Code. One of those changes affects what businesses can deduct and what they can expense. Here is just one of those changes business owners should be aware of!
A taxpayer can now elect to expenses the cost of any section 179 property and deduct it in the year the property is placed in service. Property that generally qualifies for the Section 179 deduction includes equipment purchased for business use, tangible personal property used in business, business vehicles with a gross weight in excess of 6,000 lbs. It also can include computers, software, office furniture or equipment. The Tax Cut and Jobs Act increased the maximum deduction from $500,000 to $1 million. The new law also expands the definition of section 179 property to allow taxpayers to include improvements made to the nonresidential property after the date the property was first placed into service.
The new law also increased the bonus depreciation percentage from 50 percent to 100 percent for qualified property acquired and placed into service after September 27, 2017, and before January 1st, 2023. The definition of property eligible for 100 percent bonus depreciation was expanded to include used qualified property if it met certain requirements. For instance, the taxpayer or its predecessor didn’t use the property at any time before acquiring it and the taxpayer didn’t acquire the property from a related party. You can get the full list of rules here. The new law also added qualified film, television and live theatrical productions as types of qualified property that may be eligible for the 100 percent bonus depreciation.