Need to Know
If you’ve recently purchased equipment, vehicles, or other qualifying assets for your business,
you may be eligible for powerful tax-saving strategies—namely, bonus depreciation and Section
179 expensing. These provisions can significantly reduce your taxable income, but choosing the
right approach depends on your business’s unique circumstances.
💡 What Is Bonus Depreciation?
Bonus depreciation allows businesses to deduct a large percentage of the cost of eligible assets
in the year they’re placed in service. For assets acquired and placed in service in 2023, the
bonus depreciation rate is 80%. This means you can write off 80% of the asset’s cost
immediately, with the remaining 20% depreciated over time.
🧾 What Is Section 179?
Section 179 also lets you deduct the full cost of qualifying assets in the year of purchase—but
with a few key differences:
Dollar Limits: Section 179 has annual deduction limits and phase-outs based on total
asset purchases.
Taxable Income Limitation: You can’t use Section 179 to create or increase a business
loss. It’s limited to your taxable income.
Flexibility: You can choose which assets to expense under Section 179, whereas bonus
depreciation applies to all eligible assets unless you opt out.
🚗 Vehicle Purchases: A Special Case
Vehicles often come with unique depreciation rules. For example, passenger vehicles may be
subject to annual limits, while heavy SUVs and trucks over 6,000 pounds may qualify for full
expensing under Section 179 or bonus depreciation.