Under today’s federal income tax rules, your business may be able to claim big first-year depreciation write-offs for eligible assets that are placed in service in the current tax year. But is that a no-brainer? Answer: It depends. I will explain, after first covering some necessary background information. Here goes.
The Tax Cuts and Jobs Act (TCJA) installed super-favorable first-year federal income tax depreciation breaks for business taxpayers.
New and used qualifying business assets placed in service between 9/28/17 and 12/31/22 are eligible for 100% first-year bonus depreciation. For certain assets with longer production periods and aircraft, the placed-in service deadline is extended to 12/31/23.
For tax years beginning in 2020, a business taxpayer can potentially write-off up to $1.04 million of the cost of qualifying new and used assets under the Section 179 deduction privilege.
Under a phase-out rule, the maximum $1.04