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Tax Plan Analysis: for Business – 100% Cost Recovery

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Temporary 100% Cost Recovery for Certain Qualifying Business Property

Prior to the new Tax Cuts law, taxpayers were allowed additional bonus depreciation of 50% of the property’s adjusted basis if it was new to the taxpayer and had its original use by the taxpayer, which means wasn’t purchased as a used item.

The new Tax Cuts Law, allows for 100% bonus depreciation for the adjusted basis of the property if placed in service after September 27, 2017 and before January 1, 2024. There is a phase down of the bonus depreciation starting in 2023 to 80%; in 2024, the bonus depreciation will be 60%; in 2025, in drops to 40%; and in 2026, it drops to 20%.

Sandy’s elaboration: A big winner will be qualified new sports utility vehicles (SUV) and vans used in a business. Normally, these can only be written off up to $25,000 of the business use. However, using 100% bonus depreciation allows a complete write off for the business use of a new SUV or van to the extent used in business. This makes an SUV or van just as good as a new qualified truck, which is also 100% deductible. Again, this is just another benefit for having a business.


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