Increased deductions for bonus depreciation and Section 179 expense are just some of the potential tax savings available for businesses under the new tax reform approved by Congress in the “Tax Cuts and Jobs Act.” Under the previous tax rules, bonus depreciation was limited to 50% of eligible new property. The tax reform extended and modified bonus depreciation to allow businesses to immediately deduct 100% of eligible property (now includes new AND used property) acquired and placed in-service after September 27, 2017, and before January 1, 2023.
Section 179 allows a taxpayer to immediately expense the cost of qualifying property – rather than recovering such costs through depreciation deductions. The tax reform increased the maximum amount a taxpayer could deduct under Section 179 for property placed in-service after December 31, 2017, from $510,000 to $1,000,000, with a phaseout threshold at $2.5 million.