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Buyers of business vehicles get lots of breaks under the new tax law

Buyers of business vehicles get lots of breaks under the new tax law. The annual depreciation caps for passenger autos have risen sharply. If bonus depreciation is claimed, the first-year ceiling is $18,000 for cars acquired after Sept. 27, 2017, and put into service in 2018. The second- and third-year caps are $16,000 and $9,600. After that…$5,760.  For autos bought before Sept. 28, 2017, but placed in use during 2018, the first-year cap with bonus depreciation is $16,400. If no bonus depreciation is taken, the first-year ceiling drops to $10,000. Note that bonus depreciation now applies to both new and used business vehicles.

Buyers of heavy SUVs used solely for business can write off the full cost, thanks to bonus depreciation. SUVs must have a gross weight rating over 6,000 pounds. Also, up to 100% of the cost of a big pickup truck can be expensed. Leasing a vehicle to use in your business is much less costly taxwise. If a car that’s worth more than $50,000 is first leased for business during 2018, the lessee must pay income tax each year on an amount spelled out in IRS tables. For example, on a three-year lease for a $60,000 car first put into service this year, the income inclusion is $26 in 2018, $57 in 2019 and $85 in 2020. Note that you don’t add the amounts to your income when filling out your return. Instead, you reduce the size of your deduction for the lease payments on the vehicle. Last year, the rules applied to leases of business vehicles with values over $19,000.  If your business has questions about these new breaks,  give Dugan & Lopatka a call at (630) 665-4440 or contact us at This email address is being protected from spambots. You need JavaScript enabled to view it..  

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By Dugan Lopatka - Accountants for Midsize Businesses in Chicago:  CPAs for Small Businesses

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