The Tax Cuts and Jobs Act (TCJA) made some significant changes to depreciation that can help reduce your tax bill! Under the new law, you will be able to deduct more than last year.

Two ways to get deductions:

Section 179 Property

  • Section 179 maximum deduction increased from $500,000 to $1 million.
  • The new law expands the definition of Section 179 property. It includes qualified improvement property.¬† Roofs, HVAC, fire protection systems, alarm systems, and security systems are eligible.

Bonus Depreciation

  • Increased from the asset being 50% deductible to being 100% deductible.
  • Used asset purchases are now eligible for bonus depreciation.
  • Applies to assets placed into service between September 27, 2017, and January 1, 2023.
  • Qualified film, television, and live theatrical productions eligible.

The TCJA  changed limitations on luxury automobiles depending on the amount of bonus depreciation elected. If less than 100% bonus depreciation is elected, you get an additional $10,000 in depreciation the first year. If 100% bonus depreciation is elected, the depreciation limit is $18,000 for the first year.

The TCJA will provide taxpayers with additional opportunities to increase deductions, but some of the opportunities exist for a limited time!