Bonus Depreciation Decreased for 2023
Beacon Funding
Founded in 1990, Beacon Funding is an equipment financing solutions provider for US businesses.
The phase-out of bonus depreciation is back! Why must you take advantage of this deduction before it's gone?
The plan to phase out Bonus Depreciation is back. Since 2017 we have been able to this tax incentive. Plans were announced to phase out in 2015, but that was changed in 2017 by the Tax Cuts and Jobs Act (TCJA). Here we are again!
What does this change mean for you?
Under Section 179,?you may be eligible to write off 100% of the purchase price of the equipment you finance?up to the yearly deduction limit. And if you purchase (or finance) equipment over this year's deduction limit of $1,080,000, you may qualify for bonus depreciation.
In this article…
In this article, we provide you with the latest changes to this year’s bonus depreciation, IRS’s updated timeline to discontinue this tax incentive, and how to take advantage before it phases out.
Bonus Depreciation in 2023
This year bonus deprecation is set at 80% (a 20% decline since 2022). Businesses can deduct 80% of the cost of certain assets in the first year they are acquired and placed into service.
Equipment that may qualify for this tax deduction includes tow trucks, screen-printing, embroidery equipment, landscaping equipment like skid steers, compact track loaders, mini-excavators, and other heavy machinery.
Timeline to Phase Out Bonus Depreciation by 2027
As of 2023,the rate for this tax deduction will decline by 20% over the next four years until it is no longer available.
Enjoy 80% Bonus Depreciation While You Can
To take advantage of this benefit’s full value, business equipment must be acquired and used before January 1st, 2024. If you’re reading this article before that deadline, there may still be time to utilize this deduction’s full benefit before it decreases even more.
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Contact a financing expert to get answers about tax deductions for equipment financing.*
Advantages of Bonus Depreciation
The main advantage of bonus depreciation is for businesses planning to purchase a significant amount of equipment for their operations. If this is your case, you can now accelerate your tax deduction to benefit.
Get More of Your Money Back
You Should Know: For any year you elect bonus depreciation, you must take the deduction for the full cost of all assets of the same tax asset class acquired that year, for example, all 5-year assets; but since the election is made annually, taking the deduction in one year does not affect your ability to elect, or not elect, it in the next year.
The Sooner You Start The Financing Process, The Better
Remember if you plan to finance equipment this year: The bonus depreciation benefit applies only to equipment purchases in the same calendar year.
The sooner you start the process of financing equipment, the better. Odds are you will not only rest assured that equipment will be available but more likely, you’ll receive tax incentives before the year ends.
How Can You Apply for Bonus Depreciation?
To file for bonus deprecation, you can use?IRS’s Form 4562. This form can also be used for other types of depreciation and amortization. It is highly recommended to review the form’s instructions.
Pro Tip: Check your state to see if you qualify before starting any depreciation calculations.
*?Make sure to consult with your CPA or tax advisor before any equipment to discuss the tax savings for your business.